Well, it’s taken two years to find out, but perhaps fears that hedge fund advisers would dodge disclosure rules from the Securities and Exchange Commission were overblown after all.
When the SEC adopted the rules amid significant controversy in 2004—forcing the secretive hedge funds to register as investment advisers and admit the size of their funds, principal managers, and other basic data—critics of the idea said funds would simply extend their investors’ “lockup” period beyond two years. Past that threshold, funds would be considered long-term investment vehicles rather than hedge funds, and neatly evade registration with the SEC.
