Connecticut lawmakers have introduced three bills which would dramatically tighten oversight of hedge funds in the state. The proposed legislation would require firms to obtain a state licenses, provide independent annual financial audits, as well as disclose fees and significant changes in management or management strategy. Additionally, people with less than $ 2.5 million in assets or institutions with less than $5 million would not be able to invest.
According to HedgeFund Intelligence, an independent research firm based in London that provides of hedge fund news and data, in 1991 there were 11 hedge funds in Connecticut when the state income tax debuted. In the beginning of last year there were a total of 196 firms- 35 firms of which managed more than $1 billion.Connecticut ranks third in the number of hedge funds, after New York and London. The state represents 9.5% of the world hedge fund assets.
Lawmakers hope that these laws will allow for more transparency. Hearings on the bills are scheduled for February 27th. This legislation is a preview for expected changes in regulation for the financial services industry and an enormous transition for the industry.