Connecticut State legislators are getting serious about passing a bill the makes hedge funds communicate conflicts of interest with their investors in an effort to force more transparency on an industry that is also its cash cow. The legislation is simple — all financial service firms with offices in Connecticut would have to disclose to their investors when they have a conflict of interest that could affect their ability to make investment decisions for their funds’ strategy. Funds are currently required to do this when they first start a fund and issue a private placement memorandum, but if factors change and a new conflict of interest arises there is no state law that forces them to disclose this, unless the fund is a registered investment adviser. Some press reports say the state is home to about 200 hedge funds, but without all of them required to register it is really unknown how many conduct business in Conn.
The legislation, by Banks Committee chair Ryan Barry, D-Manchester, and supported by Sen. Bob Duff, D-Norwalk, is up for a public hearing on Thursday. After comments are heard from Connecticut citizens, the Banks Committee is planning to bring it up for a vote in mid-to-late March in the house. Barry told the Greenwich Time he plans to go full steam with the bill and doesn’t think he’ll need a bunch of Republican support in the House to get it through.
To read Teri Buhl's complete article in the Greenwich Time, please click here. |
