The United People’s Front for the Preservation of Rationalization Association Network Alliance

Hedge Fund Regulation 25 May 2009

Remember the part in Monty Python’s Life of Brian when the representatives of the People’s Front for Judea get into an argument with the Judean People’s Front and then can’t remember the name of their own organization?   (If not, here‘s the video on YouTube.)

That’s probably how the major hedge fund trade associations are feeling right now.  Over the past week, there have been two high profile calls for new hedge fund trade associations to address the needs of specific constituencies.  This has added to several other calls for new associations meant to represent the interests of various players in the hedge fund sector.

First there was Cliff Asness in the now infamous “Unafraid in Greenwich” letter.  Playing off of Barack Obama’s start in politics, Asness concludes:

“Hedge funds really need a community organizer.”

Funds that investment in PIPEs (private investments in public enterprises) went a step further, actually launching their own association: the Direct Funding Preservation AllianceReports the WSJ:

“Companies that make private investments in public equities, also known as PIPE investments, have formed a trade group to educate the public about what they do…”

Regular readers may recall Phil Goldstein’s half-serious proposal last spring to start a hedge fund lobby group.  As Investment News reported at the time:

“Mr. Goldstein, who hasn’t yet set a timeline for his latest venture as a self-described “amateur lawyer,” said he envisioned the organization as being along the lines of a chamber of commerce for alternative investments.

“The working name for the new organization, Mr. Goldstein said, is the Rational Regulatory Policy Institute.”

There was Sandra Manzke’s “investor rights group” last fall.  As Bloomberg reported in November:

“…(Manzke) wrote in the missive, which asks investors to form a group — the Hedge Fund Investors United Forum — to protect clients’ rights. She declined to name specific funds until she compiles a list of those that aren’t acting in the best interest of clients.”

New groups are also springing up around the rallying cries of major pension plans including those of Larry Powell of The Utah State Retirement Board.  As the WSJ recently reported:

“In February, Mr. Powell was among about 40 representatives of institutional investors, including New York State Common Retirement Fund and the Teacher Retirement System of Texas, meeting in a Midtown Manhattan hotel primarily to discuss how next to push hedge funds for lower costs and better terms, according to people in attendance.”

The good news is that, unlike say 5 years ago, there is no shortage of apathy in the hedge fund industry.  But with AIMA and the MFA also working together to ramp up their activities, could the hedge fund industry someday suffer from too much uncoordinated advocacy?

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One Comment

  1. PD CAIA
    May 27, 2009 at 1:16 am

    The hedge fund industry is naturally a kaleidoscope (in terms of investment strategies, business models, investor base, structures…), and that’s its strength, and value to investors. But this means it’s never going to be possible to have one group with a voice of the majority of the industry. This is clearly an issue currently as the industry needs a strong defence – but I can’t see it happening. AIMA has the best shot, with its global membership spanning managers, service providers, and others, but even AIMA has significant gaps in its actual or perceived constituent base.

    And “there is no shortage of apathy in the hedge fund industry”? I don’t doubt that the author didn’t unconfuse himself enough with double negatives.


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