Hedge funds call for end to secrecy rule Hedge fund lobbyists have petitioned the US Securities and Exchange Commission to repeal the rule that lies behind one of the industry's most notorious traits: its secrecy. The Managed Funds Association, which counts George Soros, John Paulson and Louis Bacon as members of its founding council, has implored the SEC to eliminate rule 502 (c) of Regulation D - an arcane piece of Depression-era legislation that defines how the modern hedge fund industry operates. The rule officially prohibits all general advertising and solicitation by hedge funds. But it is so broadly defined that it means most do not communicate with unqualified outsiders, especially the press, at all. Investors in hedge funds themselves have long complained about the regulations. The restrictions on information have long meant it is not only hard to find out about new funds to invest in, but also that it is difficult to find out whether fund managers are providing accurate information to all their investors. A generic e-mail address on a white web page is the extent of the public presence for the $32bn Brevan Howard, for example - a firm which is believed by many to be one of the global bond markets" most influential traders. Indeed, of the 20 largest hedge funds worldwide, which manage assets of more than $500bn between them, only two - Man Group and Och-Ziff - have websites that give, like Brevan, anything more than the most basic information. And Man and Och-Ziff are large publicly listed companies. "We urge the Commission to eliminate the prohibition on general solicitation and advertising in Regulation D under the Securities Act of 1933," Richard Baker, the MFA's President and former US congressman said in a letter sent to the SEC earlier this month. Private funds and regulatory oversight of the industry in particular would be unrecognisable to the original drafters of Regulation D. "Managers generally take a cautious approach and strictly limit all types of communications about their business," Mr Baker noted. For example, private fund managers generally will not respond to press enquiries, even to correct inaccurate reports. The regulation D rules were designed to restrict the ability of private fund managers to push supposedly higher risk products to unsuitable audiences in the wake of the 1929 Wall Street crash. The MFA said it had long believed the rules to be redundant. A separate set of regulations in the US Investment Company Act effectively restricts investment in hedge funds to "qualified purchasers" - individuals with more than $5m in investments or companies with more than $25m. We hope this will take some of the mystery out of things and get rid of the legal complexity associated with marketing. We believe it is the appropriate time for these rules to change and the industry wants to be more transparent," said Stuart Kaswell, the MFA's general counsel.