The Securities and Exchange Commission approved today a preliminary rule that would require hedge funds and private equity managers to register with the agency.
As a general rule, the younger your company is the more equity you should expect to award, which is true because anyone joining your team in its early stages is taking a major career risk by coming on board and must be compensated for that risk.
Citi seems intent on continuing to invest in private equity and hedge funds despite restrictions from the implementation of the Volcker Rule in July of next year.
As The Economist went to press, it looked likely that a diluted version of the Volcker rule would pass, allowing banks to keep running hedge-fund and private-equity units for clients who want to invest in them, and perhaps to keep putting a small share of their own capital in them as well.
Unlike other financial reform that curb activities, the Volcker Rule prohibits federally insured banks from engaging in specific business lines: proprietary trading and investment in hedge funds and private equity funds.