In 2012, we will see a wave of regulation begin to crest over the U.S. hedge fund industry. While the U.S. Securities and Exchange Commission (SEC) gave the industry an initial reprieve by delaying the implementation of Title IV of the Dodd-Frank Act from July 21, 2011, the final implementing rules will go into effect on March 30, 2012. By that date, all hedge fund managers with more than $150 million in assets under management (and all of those with more than $100 million that also manage non-fund separate accounts) will have to be registered with the SEC under the Investment Advisers Act of 1940 (the Advisers Act). Advisers Act regulation is primarily oriented toward fiduciary principles and full disclosure (rather than prescriptive or prudential regulation), and many registered hedge fund managers have flourished under the Advisers Act. Nonetheless, regulation will represent significant new compliance burdens and a cultural shift for much of the hedge fund industry...

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