Soros and the Regulators

http://www.futureofcapitalism.com/2011/07/soros-and-the-regulators

What irony that regulation, which George Soros' political spending in America has done a fair amount to increase over the years, is now, if you believe the explanation in this Bloomberg article, responsible for shutting down the business that made Mr. Soros his fortune:

Soros's sons said they took the decision because new financial regulations would have made it necessary for the firm to register with the Securities and Exchange Commission by March 2012 if it continued to manage money for outsiders. Because the firm has overseen mostly family assets since 2000, when outside money accounted for about $4 billion, they decided it made more sense to run it as a family office, according to the letter.

The rule calls for hedge funds with more than $150 million in assets to report information about their investors and employees, the assets they manage, potential conflicts of interest and their activities outside of fund advising. Registered funds will also be subject to periodic inspections by the SEC.

"We have relied until now on other exemptions from registration which allowed outside shareholders whose interests aligned with those of the family investors to remain invested in Quantum," the executives said in the letter, referring to its flagship Quantum Endowment Fund. "As those other exemptions are no longer available under the new regulations, Soros Fund Management will now complete the transition to a family office that it began eleven years ago."

For whatever reason, the Soros family doesn't want the SEC mucking around in there. Can you blame him? It sure didn't work out so well for him with the securities regulators in France. Mr. Soros has acknowledged being a Hayek fan, but who knew he was also a Ayn Rand fan? He's going John Galt! An alternative would have been for him to try to get a repeal of these regulations through Congress and/or the SEC, but he's apparently decided just to stop managing other people's money. The Bloomberg article frames it as completing "Soros's transformation from a speculator...to philanthropist statesman," as if running a profitable business is somehow lower than giving money away. The SEC, Senator Dodd, and Barney Frank should all be asked to comment on what's been accomplished by their regulation depriving those who want to hire Mr. Soros of the chance to avail themselves of his services.

Thanks to reader-participant-community member-watchdog-content co-creator J. for sending the tip.

by Ira Stoll  |  Jul 26, 2011 at 9:34 am Related Topics:  Capital Markets Regulation, George Soros, Hayek, SEC receive the latest by email: subscribe to the free futureofcapitalism.com mailing list