Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Saturday, September 1, 2007

SEC's Hedge Fund Proposal Draws Fire From Investors

The SEC's proposal to raise the bar for investors qualified to invest in hedge funds -- from the current $1 million in liquid assests including real estate to $2.5 million excluding real estate -- has met with indignation from some retail investors, who don't want to be protected from themselves.  The SEC has received about 500 comment letters on the proposal, and a telephone survey of some of them by the Wall St. Journal shows that the recent market volatility has not changed their minds.  The increase is largely to account for inflation.  Since the premise for allowing hedge funds to sell their participations without registration is that the investors are sophisticated investors, and wealth is the customary proxy for sophistication, It's unlikely that the SEC will back down.  WSJ, On the Outside of Hedge Funds Looking In.

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