SEC Proposes Rule Requiring Registration of More Hedge Fund Managers


As expected, on July 20, 2004, the Securities and Exchange Commission (the “SEC”) proposed new Rule 203(b)(3)-2 (the “Proposed Rule”) under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), imposing new requirements for hedge fund managers to register with the SEC as investment advisers.

The SEC adopted the Proposed Rule by a narrow 3-to-2 vote and, in a highly unusual move, released a written dissent together with the Proposed Rule. The two dissenting Commissioners at the SEC have encouraged interested parties to submit comments to the SEC regarding these proposals during the comment period, which extends through September 15, 2004. A copy of the SEC’s proposal is available for review on the SEC’s website at

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