Published on: Thursday, June 13, 2013
It’s been nearly three years since the Wall Street Reform and Consumer Protection Act (popularly known as the Dodd-Frank Act) was enacted in an effort by Congress to make significant changes in the American financial regulatory environment that affect all federal financial regulatory agencies and almost every part of the nation's financial services industry – including the hedge fund industry.
So what impact has this regulation had on hedge funds? That’s a question UST Law Prof. Wulf Kaal has been tackling as of late with his work on a study that attempts to better evaluate Title IV of the Dodd-Frank Act, which mandates hedge fund adviser registration and increased disclosures. The study evaluates survey data collected after the registration effective date for hedge fund advisers under Title IV.
Kaal will present the findings of his study on Friday, June 14 at the 2013 Junior Scholars Workshop on Financial Services Law at the University of Connecticut School of Law.
“An important issue that relates to financial regulation and a common complaint is that financial regulation tends to hurt smaller firms more, because the cost of compliance favors larger firms, resulting in barriers to entry for smaller firms,” said Kaal, a leading expert on hedge fund regulation in the United States and the European Union. But he noted that the findings of the study lead to a different conclusion: that “the size of hedge fund advisers as measured by assets under management is associated with the cost of Title IV compliance and other independent variables.
“These findings are inconsistent with the hypothesis that smaller hedge fund advisers are more affected by Title IV compliance than mid-sized and large hedge fund advisers,” Kaal wrote. “Adviser size may not matter as much for policy adjustments and SEC rule making as the hedge fund industry claimed”
For more information on the presentation and the study go to: http://wulfkaal.com/2013/06/12/the-effect-of-the-dodd-frank-act-on-the-hedge-fund-industry/
Prof. Kaal also recently participated in a round-table discussion event on investment funds at the University of Chicago Law School, which tackled, among other related subjects, the impact of Dodd-Frank on investment funds.