Regulatory Alerts2007-01-31
CSA Staff Notice 81-316: Hedge Funds
The Canadian Securities Administrators issued this notice following a 2005-2006 review of hedge funds to address regulatory concerns arising from the industry's increasing retailization and recent global failures. The review concluded that the existing regulatory framework is appropriate but identified specific areas for improvement, including the distribution of principal protected notes, referral arrangements, and the clarity of disclosure regarding complex fee structures. Consequently, the CSA announced plans to propose mandatory registration for fund managers and continue consultations on principal protected notes and referral arrangements to enhance investor protection and market transparency.
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