Hedge Fund Registration Rule Is Overturned

The push to regulate hedge funds was dealt a major setback on Friday when a federal appeals court threw out a rule that forced thousands of United States-based funds to register with the Securities and Exchange Commission.
In its opinion published Friday, the Court of Appeals for the D.C. Circuit found fault with the commission’s decision to change its interpretation of what constitutes a hedge fund’s “client” — a change that pulled many hedge funds into the scope of the Investment Advisers Act of 1940, from which they had previously been exempt.