More than 4,000 US hedge funds are now registered with the Securities and Exchange Commission, the agency said Friday. But more than a third of them — 1,504 — only did so after the Dodd-Frank required that they do so earlier this year.
Among the biggest holdouts were SAC Capital Advisors, Elliott Management, Tudor Investment, Cerberus Capital Management, Citadel and Moore Capital Management. All these firms did not register until Uncle Sam forced them to do so.
However, a number of brand-name hedge funds that catered to institutional investors, like Bridgewater Associates, D.E. Shaw, Och-Ziff Capital Management and Paulson & Co., had long been registered with the SEC.
“Prior to the Dodd-Frank Act, regulators only saw a slice of the pie but didn’t know how big the pie even was,” said SEC Chairman Mary L. Schapiro. “The law enables regulators to better protect investors by providing a more comprehensive view of who’s out there and what they’re doing.”
The road to mandatory registration has been a long and bumpy one for hedge funds, a secretive industry that was created by loopholes in the securities laws. Hedge funds first hit Washington’s radar in 1998 after the high-profile collapse of Long-Term Capital Management, but nothing happened after the bailout.
The hedge fund industry had opposed mandatory registration for years, but the financial crisis of 2008 and financial regulation reform made registration all but inevitable.
In 2009, the agency’s lobbying group, the Managed Funds Association, reversed long-standing policy and came out in support of registration.
Hedge funds with less than $100 million will now fall under state supervision. The SEC said that 2,300 of these players have made the transition.