Regulation of Hedge Funds

Hedge funds are regulated, registered with the SEC and subject to trading restrictions.

For example, hedge funds in the U.S. are subject to regulation including:

  • Dodd–Frank Wall Street Reform and Consumer Protection Act, a bill passed in 2010, requires hedge fund advisers with $150 million or more in assets to register with the Securities and Exchange Commission.
  • Hedge funds are subject to the anti-fraud provisions of the Securities Act of 1933.
  • Only accredited investors can invest in hedge funds. Accredited investors include individuals who have a minimum net worth of $1,000,000 or, alternatively, a minimum income of $200,000 in each of the last two years and a reasonable expectation of reaching the same income level in the current year. For institutional investors, the minimum net worth is $5,000,000 in invested assets.
  • Hedge funds that have more than 499 investors must register with the SEC and must comply with quarterly reporting requirements.
  • Many funds are also under the jurisdiction of the Commodity Futures Trading Commission.