Tuesday, July 26, 2011

Frankendodd: "George Soros and the Feudal Future of Hedge Funds"

There's always torches and pitchforks.
From CNBC's Net-Net:
Hedge fund regulation is not working out.
Years of concern about giant pools of investment capital that were said to be under-regulated and under-taxed concluded in Dodd-Frank’s hedge fund regulation requirements and gave rise to new plans to end capital gains treatment for the profits of hedge fund managers. 

But instead of kneeling down before the regulators and the tax collectors, some of the largest hedge funds are avoiding the regulation by shutting themselves off to outside investors. 

First, we had Stanley Druckenmiller, who shuttered his $12 billion Duquesne Capital Management hedge fund just a month after the passage of Dodd-Frank. Druckenmiller cited his inability to meet his own performance expectations and the personal toll of working as a fund manager, rather than Dodd-Frank. But between 30 percent and 40 percent of the funds assets belonged to Druckenmiller or his associates, and he continues to manage that money. The fund didn’t shut down so much as go private—and escape the grasp of regulators. 

Carl Icahn followed suit, returning the capital to his outside investors. But this represented just $1.76 billion of the $7 billion he has under management. Icahn didn’t shut down—he just shut outside investors and regulators out. 

And now we learn that George Soros is going down the same path. He’s returning $1 billion of outside investor capital. Now he’ll manage just the remaining $20 billion or so personally owned by him, his family and his foundations...MORE