CORAL GABLES, FL: The hedge fund industry is navigating strict communications rules to reach stakeholders about their views on possible new regulation.
Last month, Treasury Secretary Tim Geithner said large hedge funds might need to register with the SEC, and Congress is mulling a number of proposals that would establish new federal oversight of the funds.
“The expectation is that regulation will happen. The only [question] is when... and what the criteria will be,” said Mitch Ackles, CEO of Hedge Fund PR. He is also a director and spokesperson for the Hedge Fund Association (HFA), a nonprofit comprised of hedge funds, investors, and service providers, such as law firms.
On April 28, the HFA is hosting a Chicago symposium to discuss the group's lobbying efforts, which began in January. HFA has been discussing their regulatory views with lawmakers, emphasizing that hedge funds with assets under $250 million should not be subject to the same rules as larger organizations.
“New hedge funds will need more money to launch,” said Ackles. “It will impede the market and take some of the innovation out.”
Hedge funds are also dealing with tremendous financial losses. Ackles' firm currently has eight clients, but expects 15 by year's end. One client, Michael Levas, founder and chief investment officer of Olympian Capital Management and an HFA board member, sees opportunity in media outreach, even while following the rules about what hedge funds can say to the public.
“Being more transparent about the business... is most important,” said Levas, who has discussed the industry and financial markets with media outlets and at events. “Having an open dialogue and not this circle of secrecy will obviously help.”
“This misperception that to engage in any form of communications is to give away the secret sauce has actually hurt hedge funds, preventing them from developing strong brands,” added Dan Simon, MD at Cognito, which represents several hedge funds.