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Soros To Close His Fund To Outsiders

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http://dealbook.nytimes.com/2011/07/26/soros-to-close-fund-to-outsiders/?ref=business

George Soros, the famed investor who broke the Bank of England and came to represent the swashbuckling style of hedge fund managers and then their entry into the world of global affairs, has decided to return money to outside investors in his hedge fund.

Mr. Soros is the latest hedge fund magnate to forgo managing the money of outsiders in favor of his own, though the move is more symbolic than substantive. Of the roughly $26 billion the fund manages, less than $1 billion belongs to outside investors.

Everyman for himself.

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The interesting bit to me is that $25 billion of $26 billion in the fund belongs to Soros and his family. Say what you like about him, he is good with money.

The other interesting bit to me is that the rich always seem to have the ability to extract themselves from the clutches of the state when it imposes too great a cost on them. It is the compliance and disclosure requirements of the state that have forced Soros (as well as Ichan and Meriwether) to take their funds private and liquidate outside investors.

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Everyman for himself.

That's one interpretation...

What I don't understand is this: hedge funds can't act outside the system - so, the regulators have access to their trading already as they already regulate the brokers and banks who establish counter-parties for hedge funds.

I don't see what the regulator gains by regulation of hedge funds themselves - either they already have all the information and aren't capable of interpreting it (where giving them more information doesn't look like an obvious solution) or they don't - which makes me wonder - why is anyone permitted to interact with the system in such a way as to require regulatory oversight.

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As Obama said in his speech last night, he wants to change the rules that currently allow a hedge fund making billions to pay less tax, as a percentage, than most people working in ordinary jobs.

Soros, IMPO, has seen the change coming and has simply safeguarded himself against any overnight changes in US hedge fund taxation.

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What I don't understand is this: hedge funds can't act outside the system - so, the regulators have access to their trading already as they already regulate the brokers and banks who establish counter-parties for hedge funds.

The regulators plural, have some of the information. The problems (if you think that regulators are in any way able to prevent anything very much) are:

1. hedge funds trade across multiple jurisdictions meaning that the regulators from different countries would have to share information to get the fuller picture.

2. hedge funds can trade with each other

3. hedge funds trade with all sorts of entities that aren't, and shouldn't, be regulated as market participants

Simpler just the regulate the funds themselves. That said, it won't make a blind bit of difference except, maybe, in the case of outright fraud (e.g. Madoff, Galleon, Amaranth etc).

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As Obama said in his speech last night, he wants to change the rules that currently allow a hedge fund making billions to pay less tax, as a percentage, than most people working in ordinary jobs.

Soros, IMPO, has seen the change coming and has simply safeguarded himself against any overnight changes in US hedge fund taxation.

I guess Obama will have to raise CGT to achieve that - not good for the stock markets.

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  • 343 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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