* Global hedge fund group favors registration requirement
* Congressional panel to weigh hedge fund oversight May 7
* Need separate law for private investment funds-Chanos
WASHINGTON, May 6 A global hedge fund industry group backs U.S. plans to require hedge fund advisers to register with federal regulators, a move that would align U.S. rules with those in the UK.
The Alternative Investment Management Association, in remarks to be delivered to a U.S. congressional committee on Thursday, also said registration creates a dialogue between the hedge fund adviser and supervisor that supports greater understanding of hedge fund activities.
The London-based group, which represents more than 1,100 hedge fund firms in more than 40 countries, is among those due to testify to the capital markets subcommittee of the House Financial Services Committee. Other witnesses on the registration issue include the Teacher's Retirement System of Texas and well-known short-seller James Chanos.
U.S. policymakers are pushing for oversight of the loosely regulated $1.3 trillion industry amid concerns that some sections of the financial system are too opaque and systemically important to go unsupervised.
The U.S. Securities and Exchange Commission, which regulates investment advisers among other things, previously tried to require hedge fund advisers to register with the agency, but a federal court overturned its rule in 2006.
Some lawmakers have introduced legislation to give the SEC the authority it lost in court, but Chanos and the $80-billion Texas pension fund said this was not the right approach.
Chanos said simply requiring hedge fund managers to register as investment advisers could make investors overly reliant on SEC regulation that was not robust enough to address the unique characteristics of private funds.
"We believe that... improved investor protection and enhanced systemic oversight could be better achieved with a stand-alone statute tailored for private investment funds," he said in prepared remarks to be delivered at the panel.
The Texas Teacher's pension fund said the investment adviser laws that were adopted in 1940 are not designed to control systemic risk and are not tailored for the investment structures and strategies that have prevailed over the last 30 years. (Reporting by Rachelle Younglai; Editing by Tim Dobbyn)
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