Senator McKinney Cautions Banks Committee Against Over Regulating Connecticut Hedge Fund Industry

McKinney: Proposed bill will drive away business, slow economic growth

Hartford, CT – Senate Minority Leader Pro Tempore John McKinney (R-Fairfield) criticized the banking committee today for proposing legislation that would subject Connecticut-based hedge funds to more stringent government regulation than hedge funds based in any other state. S.B. 1171, An Act Concerning Hedge Funds, supported by banks committee co-chairs Senator Bob Duff (D-Norwalk) and Representative Ryan Barry (D-Manchester) passed out of committee today and will be voted on by the Connecticut State Senate this spring.

“Connecticut, particularly Fairfield County, is widely regarded as the home of the US hedge fund industry. This is an important sector of our economy and tax base,” said Senator McKinney. “Why would we want to make doing business in Connecticut a competitive disadvantage for one of our most important and prosperous industries? Why would a hedge fund manager want to stay in Connecticut if this law is passed? It doesn’t make sense.

“State-specific regulation in this case will only serve to encourage the hundreds of hedge funds currently based in Fairfield County to pick up and move to a less threatening home – perhaps New York or New Jersey.”

Connecticut is a world leader in hedge fund management. Connecticut firms manage more than 1/3 of the $1 trillion global hedge fund industry, making Connecticut the No. 2 hedge fund center in the U.S. Seventeen Connecticut firms are on Institutional Investor’s list of the world’s top 100 hedge funds. On Monday, Governor Rell welcomed investment managers from around the globe to the inaugural World Hedge Fund Forum in Greenwich.

“A thriving hedge fund industry is in Connecticut’s and the US’s best interest,” said Senator McKinney. “Market discipline is the most effective way to address the potential risks of these investments. Heavy-handed government regulation is not the answer, particularly when the rules apply to one state and not another.”

S.B. 1171 Vote: Yea – Sen. Duff, Rep. Barry, Sen. Crisco, Rep. McCrory, Rep. Boukus, Rep. Graziani, Rep. Guerrera, Rep. Harkins, Rep. Kirkley-Bey, Rep. Mazurek, Rep. McMahon, Rep. Moukawsher and Rep. Stripp; Nay – Sen. DeLuca, Rep. Ryan, Rep. Frey, Rep. Widlitz and Rep. O’Neil