With registration looming, many hedge funds say they'll follow Soros

With registration requirements looming, more hedge fund managers are likely to follow George Soros in opting for the family office structure over the red tape of running a hedge fund. According to a sentiment survey of 40 hedge fund managers, released today from research firm Infovest21 LLC, 56% of managers said they expect more hedge funds to start returning clients' money in order to run family offices. Mr. Soros, 81, announced this week that he plans to close his $25.5 billion 40-year-old hedge fund operation, Soros Fund Management LLC, and open a family office. Infovest president Lois Peltz cited the new rules that will require hedge fund managers with at least $150 million under management to register with the Securities and Exchange Commission by March as a major factor in the shifting attitudes. Hedge funds managing less than that amount will be required to register at the state level. The family office route enables managers to avoid the registration as long as it is a pure single-family office, and not a multifamily office. According to Ms. Peltz, those managers anticipating a trend toward more family office transitions cited increased risk of liability due to growing oversight by regulators, labor laws, complicated tax issues and the waiver of carried interest. Those managers most likely to shut down their hedge funds are those that do foreign-exchange trading, according to the survey, which was conducted this week.