Hastings Business Law Journal


The hedge fund industry has grown tremendously and gained much influence on our nation's capital markets in the past decade. Helping fuel this growth in size and influence has been the fact that many hedge funds have sought investments from less affluent and sophisticated investors than in the past. In addition, the number of securities enforcement cases filed against hedge funds has increased. As a result, many have called for some form of regulatory oversight to protect the investing public and reduce market risks. This article focuses on the regulations imposed on hedge fund advisers as well as the controversial rule by the U.S. Securities & Exchange Commission, now vacated, which would have required most hedge fund advisers to register as investment advisers. The author also looks at the Commission's new anti-fraud rule, adopted in July 2007 to protect investors in hedge funds, and discusses the best known cases brought against hedge funds and their advisers by securities regulators and criminal authorities.