Trio of Bills Proposed in Connecticut Legislature Would Introduce Substantial State Regulation of Hedge Funds
Hedge Fund Law Report
In the January 2009 Session of the Connecticut General Assembly, Connecticut lawmakers proposed three bills that would increase the state’s role in the regulation of private investments funds, including hedge funds, with various types of connections to Connecticut. In particular, lawmakers proposed the following: (1) Connecticut Senate Bill No. 953, “An Act Concerning Hedge Funds,” which generally would raise qualifications for investors in private funds that have offices in Connecticut where employees regularly conduct business on behalf of the funds, and expand disclosure requirements applicable to such funds; (2) Connecticut House Bill No. 6477, “An Act Concerning the Licensing of Hedge Funds and Private Capital Funds,” which generally would require hedge funds established or conducting business in Connecticut to obtain a license from the Connecticut Banking Commissioner; and (3) Connecticut House Bill No. 6480, “An Act Requiring the Disclosure of Financial Information to Prospective Investors in Hedge Funds and Private Capital Funds,” which generally would require hedge funds domiciled in Connecticut and receiving money from Connecticut pension funds to disclose to prospective pension fund investors, upon request, certain financial information. All three bills have been referred to the Banks Committee of the Connecticut General Assembly. In addition, at a public hearing held by the Banks Committee on February 24, 2009, Connecticut Attorney General Richard Blumenthal proposed an alternative scheme of state hedge fund regulation. We provide a detailed analysis of each of the three bills as well as Attorney General Blumenthal’s proposal, including a discussion of industry responses from some of the leading authorities on federal and Connecticut hedge fund regulation.