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Unpublished Paper
REGULATING HEDGE FUND MANAGERS: THE INVESTMENT COMPANY ACT AS A REGULATORY SCREEN
ExpressO (2007)
  • Mercer E Bullard, University of Mississippi
Abstract
The Blackstone IPO in June 2007 signaled a new strategy of exploiting all of the advantages of a public offering while avoiding critical regulatory constraints. Hedge fund managers such as Blackstone are the functional equivalent of private investment companies in which only sophisticated investors are eligible to invest. Regulators have ignored this economic reality, however, in permitting hedge fund managers to evade all of the restrictions that Congress imposed on publicly offered investment pools. Hedge fund managers should be subject to the Investment Company Act, which uses a combination of statutory and regulatory exemptions as screens to ensure the optimal level of regulation for investment companies such as Blackstone. Internal inconsistencies in regulators’ positions and the operational needs of hedge fund managers make inevitable their ultimate regulation under the Act, which will in turn stimulate further liberalization of private offering rules to improve the practicability of raising capital in private markets.
Keywords
  • private equity,
  • finance,
  • mutual fund,
  • investment company,
  • hedge fund,
  • hedge fund manager,
  • blackstone
Disciplines
Publication Date
August, 2007
Citation Information
Mercer E. Bullard, Regulating Hedge Fund Managers: The Investment Company Act as a Regulatory Screen, 13 STANFORD J. LAW, BUS. & FIN. 286 (2008)