This comment will explore in depth the evolution of hedge fund regulation in the United States, and compare the current state of hedge fund regulation in the United States with that in Europe, specifically the United Kingdom, the European Union, and Germany. The comment is comprised of six sections. Section 11 provides an overview of hedge funds. Section III explores the evolution and current state of hedge fund regulation in the United States. Section IV provides an overview of the current regulatory framework of hedge funds in Europe, more specifically in the United Kingdom, the European Union, and Germany. Section V compares and contrasts the United States' hedge fund regulatory framework with that of Europe. Finally, Section VI, in light of the comparative analysis in Section V, posits recommendations aimed at improving the United States' current hedge fund regulatory framework. The comment concludes that, after the United States' initial attempt to implement a rules-based approach in regulating hedge funds failed, the United States temporarily adopted a principles-based approach that attempted to mimic that of the United Kingdom. However, the United States' Securities Exchange Commission (SEC) recently proposed new Rules and adopted a final Rule, which seems to suggest that the United States has reverted to a rules-based approach. Moreover, the United States' rules-based approach is deficient because it does not go far enough with respect to requiring independent fund valuation, falls short of gathering adequate information about hedge funds, fails to take a risk-based approach, and, like the United Kingdom, also fails to address the threat of "empty voting."
A Comparative Analysis of Hedge Fund Regulation in the United States and Europe,
Nw. J. Int'l L. & Bus.