What defines a hedge fund under the draft legislation?
Hedge funds are private investment funds in which the investors have agreed to pool their money under the control of an investment manager. Hedge funds are typically open only to “qualified purchasers,” an SEC term referring to institutional investors like pension funds and wealthy individuals with assets over a specified minimum amount. The Bill applies to any investment company that has at least $50 million in assets or assets under its management and relies on Sections 80a-3(1) or (7) of the Investment Company Act to avoid compliance with the full set of Investment Company Act requirements. What was the Investment Company Act loophole? Sections 80a-3(c)(1) or (7) of the Investment Company Act defines an “investment company” under the Act. By limiting the number of their beneficial owners and accepting funds only from investors of means, hedge funds qualify for the statutory exclusions provided in Sections 80a-3(c)(1) and (7) of the Investment Company Act, and thus have not been subj
