The deadline for hedge funds to register with the Securities and Exchange Commission is today, and while some investment advisors plan to skirt the rule through loopholes, others think it might be just the sort of public relations ploy they've needed.

According to a report from The Financial Times, some hedge funds in the U.K. and Hong Kong, which are popular overseas jurisdictions for hedge fund managers, are seeking credibility through the rule. Others overseas think it's a bit like taking their medicine, and then there's a camp that feels that the Financial Services Authority, the U.K.'s top regulator, already has a handle on things and the SEC is just meddling.

"They may not like [registration], but they have little choice if they want to continue to attract U.S. investors and not raise suspicion in the eyes of regulators," said one Hong Kong hedge fund manager.

Phillippe Bonnefoy, partner at the London-based Cedar Partners, a $2 billion hedge fund-of-funds, said, "Outside the U.S., the feeling is that the FSA is completely on top of hedge funds, far more than anyone else in the world."

In the U.S., the SEC estimates that 1,000 hedge fund managers have registered, either voluntarily or because they're already managing mutual funds. Another 1,000 would need to register to bring the industry under compliance, the SEC said.

It's widely expected that the SEC will use the registration rule to begin intense scrutiny of the industry, which is reaching more everyday investors and has previously operated without regulatory supervision. Former SEC Chairman William Donaldson blamed the hedge fund industry for playing a leading role in the mutual fund scandal.

A federal appeals court in Washington, however, is still considering a lawsuit from New York hedge fund manager Phillip Goldstein that would overturn the rule. Goldstein told The Times that he is "cautiously optimistic" that the court would rule in his favor.

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

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