Date of Award
Doctor of Juridical Science (SJD)
Until the global financial crisis in 2008, hedge funds had relied on various safe harbor rules to remain unregulated. Since then, various subprime mortgage crisis-driven regulatory reforms have been made worldwide. Through the implementation of registration and reporting obligations the hedge fund regulatory framework has been changed to reinforce regulations that may provide financial stability, making hedge funds more like other regulated entities.
Current hedge fund regulations are based on the policy grounds, on one hand, that macro-prudential regulations are necessary due to the potential adverse effects on the market from hedge fund size and leverage positions, and on the other hand, that conventional micro-prudential regulations are necessary due to the rising exposure of unaccredited and unsophisticated investors to the market (necessitating governmental protection).
Based on observations of the hedge fund regimes in the U.S., the U.K., and Korea, this article concludes that the current regimes have succumbed to the pressure to overregulate: It would be prudent for future regulatory efforts to focus on making the hedge fund market accessible to only accredited investors, and the role of a visible regulatory hand in this market should be refrained from to the extent necessary to promote market competition and financial innovation, while mitigating potential systemic risk from hedge fund failures.
Kim, Eun Jip, "Rethinking Hedge Fund Regulation: Focusing on the U.S., the U.K., and Korea" (2014). Theses and Dissertations. 3.