Soros Doesn’t Want Your Money

In one of the most visible moves as a result of the new SEC regulations on investment advisers, George Soros is closing his $25 billion Quantum Endowment Fund to outside investors and returning their money.

Why?

"We have relied until now on other exemptions from registration which allowed outside shareholders whose interests aligned with those of the family investors to remain invested in Quantum. As those other exemptions re no longer available under the new regulations, SFM will now complete the transition to a family office...."

The Soros fund management company would have to register as an investment adviser and it doesn't want to do that. They are kicking out non-family money and using the family office exemption to avoid registration.

Is this a good thing? Soros is a controversial figure, reviled for some because of his currency bets. For his investors, he returned about 20 percent a year, on average, since 1969. If some of those investors invest your retirement money, then you may be worse off.

It's clear that the regulatory regime changes resulting from Dodd-Frank are going to change the business models for many money managers. Some, like Soros, will pull back operations to avoid the regulatory oversight.

Sources:

• Soros to End Hedge-Fund Career, Return Money to Investors by Katherine Burton in Bloomberg
• Soros Ends His Run Investing Other People's Money by Marion Maneker in The Big Picture
• Soros to Close his Fund to Outsiders by Azam Ahmed in NYtimes.com's DealBook

For additional commentary on developments in compliance and ethics, visit Compliance Building, a blog hosted by Doug Cornelius.

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