ON APRIL 14, PHILLIP Goldstein will submit the first brief to court outlining his case against the SEC's new ruling requiring hedge fund managers to register. Goldstein, president of Kimball & Winthrop, investment managers for Opportunity Partners, a relatively small $82 million hedge fund, will argue that the SEC, as an agency, does not have the power to alter or make law.
The majority of hedge fund managers will be crossing their fingers for him – it's hard to find an unregistered manager who supports the ruling. Some are leaving it to Goldstein to fight their battle but other hedge fund managers are staging their own protests.
Whether because they deem the ruling superfluous, a cost burden or, as the Goldstein camp suggests, unlawful, many hedge fund managers have decided that they will not be registering in the next 11 months. Instead, some US managers are now considering moving offshore or altering the terms of their funds to dodge registration. Even foreign fund managers, with their "SEC-lite" registration requirements, are boycotting the ruling by shunning US investors.
It's a blow to the SEC, which has promoted the ruling as being positive for US investors, and a way of obtaining more information about the secretive hedge fund industry.
