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A Flood of Start-up Funds
(late 2005)

Robert Green, a non-lawyer member of Green & Company CPAs, LLC, says the increase in the number of fund managers he has as clients has little to do with the February 2006 deadline. 

“Most of our clients are small start-up funds, and they are still below SEC requirements,” he says. “Registration has always been a bigger issue in the media than in reality.” 

Because the clients most interested in SEC registration are larger funds, the rush to get everything in order has been far less apparent among smaller funds that are just starting out. Mr. Green says that he hasn’t seen a huge swell in the number of clients who want help with registering because the majority of smaller funds are already registered within their states. 

“There are maybe only 1,000 or so funds that need to register with the SEC,” he adds. What he has seen is an increase in the number of funds themselves, coupled with an increase in a demand for the amount legal service provided by the law firms working for the funds. 

“Hedge fund attorneys and accountants are in tremendous demand, and they need to do twice the work,” Mr. Green says. “Hedge funds are proliferating.” 

The high demand for attorneys who focus on small funds has its basis in geography, he says. Because smaller hedge funds are regulated on the state level, the attorneys who service them need to be knowledgeable about state-level regulations. But an attorney may be an expert in one state, but lacking knowledge in another. “So it’s hard to assemble supply to meet demand,” Mr. Green says. 

“It’s gotten more complex because of the democratization of hedge funds,” he adds. “Someone has to put together a coordinated national program. We have, but it hasn’t been easy.”