Lamandini, Marco --- "Self-regulation – What Future in the Context of Hedge Funds?" [2012] ELECD 244; in Athanassiou, Phoebus (ed), "Research Handbook on Hedge Funds, Private Equity and Alternative Investments" (Edward Elgar Publishing, 2012)

Book Title: Research Handbook on Hedge Funds, Private Equity and Alternative Investments

Editor(s): Athanassiou, Phoebus

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781849802789

Section: Chapter 9

Section Title: Self-regulation – What Future in the Context of Hedge Funds?

Author(s): Lamandini, Marco

Number of pages: 24

Extract:

9. Self-regulation ­ what future in the
context of hedge funds?
Marco Lamandini*


1. INTRODUCTION

In a study on whether and how to regulate hedge funds, published shortly
before the outbreak of the financial crisis, in August 2008, Professor
Paredes1 summarized four basic regulatory choices: (i) do nothing; (ii)
regulate hedge funds directly; (iii) regulate hedge funds indirectly, focusing
on their managers, and (iv) regulate hedge fund investors. Comparative
legislative history offers a wealth of examples of each of those approaches
having been followed. However, the first option was to prevail, for a very
long time, both in the United States (US) and in the European Union
(EU), in the field of hedge funds, before the financial crisis tilted the
balance in favor of external (direct) regulation. This chapter compares
external to self-regulation, with a view to assessing what the practical dif-
ferences between them are and to evaluating the role of self-regulation, in
the post-financial crisis era, as a hedge fund regulatory tool.


2. AN OVERVIEW OF THE US REGULATORY
APPROACH TO HEDGE FUNDS UNTIL THE
OUTBREAK OF THE FINANCIAL CRISIS

Dr. Alfred Winslow Jones is generally credited with forming the first hedge
fund in 1949, in the US.2 The industry was to grow substantially over the


* Full Professor of Company and Securities Law, University of Bologna.
1
Paredes, Troy (2007), `Hedge Funds and the SEC: Observations on the How
and Why of Securities Regulation', Washington University, Faculty Working
Paper Series, paper no. 07-05- ...