The tremendous growth of the alternative investment industry, in particular hedge funds, has drawn the attention of many of the individual states legislatures, attorney generals and regulatory agencies. MFA is actively and strategically responding to state regulatory proposals that would impact doing business in such states. Our nationwide endeavors include the following:

Connecticut

• In 2007, MFA successfully lobbied against a bill introduced in the Connecticut legislature that would have imposed unique and burdensome investor limitations and disclosure requirements on hedge funds in Connecticut.
• In March 2006, MFA testified before the Connecticut state legislature/assembly and successfully lobbied against state legislation that would have required certain Connecticut hedge funds to disclose detailed portfolio information.

New York

• MFA successfully lobbied against onerous disclosure provisions of legislation impacting New York limited liability entities. Without the work of MFA, the new legislation, signed into law on May 31, 2006, would have required hedge funds to publish their 10 largest stakeholders. The final bill was much less burdensome than originally proposed.

California

• In late 2007, MFA and the Coalition of Private Investment Companies (CPIC) united efforts to oppose a rulemaking proposal by the Commissioner of the California Department of Corporations. This proposed rule would require any hedge fund manager or investment adviser with a place of business in California to register with the State, unless the adviser was already registered with the SEC. MFA and CPIC filed a joint comment letter on the rule proposal.

New Jersey

• Also in late 2007, MFA began its advocacy efforts related to proposed bills in New Jersey that would negatively affect the alternative investment industry. One bill would eliminate an existing exemption from registration with the State as an investment adviser. If the bill is adopted as proposed, investment advisers who have a place of business in the State of New Jersey and who are not registered with the SEC will be required to register with the State. Another bill would add hedge funds to the definition of merchandise, and therefore the sale or advertising of hedge funds would be subject to the New Jersey Consumer Fraud Act.