07/05/2010 Author: Shannon Hawthorne

Aima voices concern over proposed US registration law

The Alternative Investment Management Association (Aima) has expressed concern over proposed legislation regarding the dual registration of non-US hedge fund managers in the US, which is currently being considered by the Senate.

“If non-U.S. hedge fund managers are subject to supervisory standards outlined by the G-20 and the US, including similar reporting requirements and agreed information-sharing arrangements, then there should be an exemption from additional US registration for non-US hedge fund managers,” said Todd Groome, chairman of the association.

According to Groome, while Aima is supportive of the goals of the ‘Restoring American Financial Stability Act’ as a whole, there are some fears about the duplicative and administrative costs of having to report to two or more supervisors – namely, that such burden would act as a barrier to entry, particular for smaller managers, and subsequently limit investor choice.

Aima has also voiced concerns that US hedge fund managers could, in turn, face reciprocal duplicative registration requirements when seeking to offer investment advisory services outside of the US. “Again, this would limit investor choice and market access,” said Groome.

A further issue worrying the association is that the burden that registering and supervising all relevant non-US investment advisers would place on the Securities and Exchange Commission, should it be given this responsibility, would “challenge [the regulatory body’s] exist supervisory capacity and thus would not be supportive of the broader financial stability objectives”.