SEC rule could stop pension funds investing in hedge funds
Hedge funds need to hold insurance to win US pension plan money. New rules would make cover too dear
Pension funds in the US may be unable to invest in hedge funds if a sweeping package of financial reforms by the markets regulator is passed in its current form, warn hedge fund managers and lawyers.
The US Securities and Exchange Commission is proposing a rule that aims to stop private fund managers evading legal liability for actions leading to investment losses. Hedge funds depend on this indemnity to obtain insurance.
Without indemnity, insurance premiums would soar and insurers may even
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