TAILIEUCHUNG - PRIVATE INVESTMENT FUNDS: HEDGE FUNDS’ REGULATION BY SIZE

While the term “Sovereign Wealth Fund” was coined only recently, SWFs have a more than 50-year history, with the first fund established by Kuwait in 1953. 12 There is no universally agreed upon definition of SWFs. The . Treasury Department narrowly defines SWFs as “a government investment vehicle which is funded by foreign exchange assets, and which manages those assets separately from the official reserves of the monetary authorities (the Central Bank and reserve-related functions of the Finance Ministry).”13 The . Treasury Department’s definition is meant primarily to distinguish SWF investment from official reserves managed by a country’s central bank. Because the primary goals of official. | PRIVATE INVESTMENT FUNDS HEDGE FUNDS REGULATION BY SIZE Tamar Frankel I. Introduction This Article focuses on hedge funds a species of private investment funds. These funds appeared in the 1950s and remained active but small. Then in a fairly short period they grew enormously to over trillion although the estimates vary. 1 Hedge fund managers engage in more than twenty-five different categories of investment Since 2002 the number of hedge funds has more than doubled to an estimated 9 000 funds 3 and their assets have grown by 400 to an estimated trillion since Other estimates are higher suggesting current hedge fund assets at 2 trillion and their number worldwide at 13 000 although the United States Professor of Law Michaels Faculty Research Scholar Boston University. I am indebted to Claudia F. Torres . Boston University Law School for the research in her paper Managing the Excessive Use of Leverage by Hedge Funds written in satisfaction of a seminar Investment Company Regulation Fall 2007. I am also indebted to Sofia Tsachouridou . Boston University for her meticulous and expansive research. 1. In July 2007 the number of hedge funds was estimated to be about 9 000. Their assets have grown by 400 to about trillion since 1999. Hedge Funds and Systemic Risk Perspectives from the President s Working Group on Financial Markets Hearing Before the H. Comm. on Financial Servs. 110th Cong. 61-66 2007 statement of Robert K. Steel Treasury Under Secretary For Domestic Finance hereinafter Steel Testimony see also SEC. Exch. Comm. Div. of Inv. Mgmt. Office of Compliance Inspections Examinations Implications of the Growth of Hedge Funds vii 2003 available at http news studies hereinafter SEC Staff Report . 2. SEC Staff Report supra note 1 at 34 . 3. Steel Testimony supra note 1. 4. Id. 657 658 R UTGER S LAW JO URNAL Vol. 39 657 market accounts for 70 of the funds The different estimates may be

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