Who's Afraid of Dodd-Frank? Not Wall Street

From the perspective of hedge fund managers, the Dodd-Frank act is in many ways a huge drag. The law requires them to register with the Securities and Exchange Commission, supply reams of sensitive data on trading positions, carefully screen potential investors, and hire compliance officer after compliance officer. How could all of this not eat into profits and hamstring competitiveness?

Now there are some early data to weigh against these fears. Wulf Kaal, a law professor at the University of St. Thomas in Minneapolis, has released the first survey of fund advisers to be conducted since parts of the law began taking effect. His findings: Despite their grumbling, funds are taking the new regulatory burdens in stride. Kaal and his team spoke with 94 people who work for private equity, venture capital, real estate, and hedge funds. Three-quarters of respondents said the new registration and disclosure requirements haven’t affected their investors’ rate of return. Four-fifths said they didn’t take Dodd-Frank into account when determining the size of their funds. And 7 in 10 said they don’t plan a “strategic response” to Dodd-Frank. In other words, the law won’t lead them to alter their investing style.