George Soros to Liquidate Hedge Fund

George Soros is getting out the hedge fund business, though he will still continue to manage his family assets which are estimated to be worth billions.

Citing new rules that would have required it to submit to more federal oversight, Soros’s management firm said Tuesday that it plans to close its $25.5 billion funds to outside investors and become a family-only enterprise. The move raised eyebrows in financial circles because Soros was an outspoken advocate for reforming Wall Street in the wake of the financial crisis.

George Soros is getting out the hedge fund business, though he will still continue to manage his family assets which are estimated to be worth billions.

Citing new rules that would have required it to submit to more federal oversight, Soros’s management firm said Tuesday that it plans to close its $25.5 billion funds to outside investors and become a family-only enterprise. The move raised eyebrows in financial circles because Soros was an outspoken advocate for reforming Wall Street in the wake of the financial crisis.

The change also enables Soros, who turns 81 next month, to become further involved in various philanthropic and political causes to which he has already devoted more than $7 billion, according to a person familiar with the company, who spoke on the condition of anonymity to discuss the firm’s transition.

Ironically, Soros’s backing for the sweeping financial reforms — which was embodied in landmark legislation enacted by Congress last year — helped put an end to his time in the hedge-fund business.

The act requires hedge funds, which manage pools of money on behalf of investors, to register with the Securities and Exchange Commission by early next year.

“An unfortunate consequence of these new circumstances is that we will no longer be able to manage assets for anyone other than a family client as defined under the regulations,” the firm’s deputy chairmen, Jonathan Soros and Robert Soros, wrote in a letter to investors Tuesday.

To comply with the rules, Soros Fund Management will return about $750 million of outside investors money, according to the person familiar with the firm.

A Hungarian-born Holocaust survivor, Soros was a titan in the hedge fund industry, where he made his fame and fortune by taking big and often unconventional bets that earned him billions. In 1992, he made an estimated billion dollars in profit by rightfully betting that the value of the British pound would fall, earning him the nickname, “the man who broke the pound.” He is estimated by Forbes to be worth $14.5 billion, placing him at 46 on the magazine’s 2011 ranking of the world’s billionaires.

But some say Soros will be remembered less for how he made his wealth and more for how he spent it.

“I think his legacy will be in the impact he’s had in his philanthropy,” said Justin van Fleet, an expert on philanthropy at the Brookings Institution’s Center for Universal Education. Of particular note, Van Fleet believes, will be Soros’s promotion of “society-wide reforms that really bring everyone up” in the countries he has given to, such as the promotion of democracy in Eastern Europe through his Open Society Foundations.

Since Soros established the group in 1984 to help countries mark their transition from communism, its activities have grown to more than 70 countries.

Soros chairs the group, based in New York, and remains chairman of his investment firm, Soros Fund Management.

Source: The Washington Post