U.S. regulators grow alarmed over ‘hedge fund hotels’
Jan 2nd, 2007 | Filed under: Hedge Fund RegulationBy: Jenny Anderson, International Herald Tribune
Published: January 1, 2007
In this piece about hedge fund incubators, the International Herald Tribune makes several comparisons to the business incubators of the technology boom.
“Just as venture capitalists and others during the technology boom created incubators to help entrepreneurs start businesses without the headaches of finding real estate and office support, so a few big investment banks are offering young ambitious hedge fund traders a temporary home, complete with receptionists, espresso machines and consultants to help manage their information systems.
“As the technology incubators sought to oversee the birth of the next Netscape, so these hedge fund hotels hope that the small hedge funds may some day become big clients of the bank.”
Apparently, regulators are uncomfortable with the cozy relationship between the banks that run these incubators and the hedge funds that use them. Some have even called them a conflict of interest for the banks due to the issuance of (trading and prime brokerage) soft dollars to their own tenants.
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Great article. I just read 4 articles on this exact topic across different topics and this was my favorite, I’ll probably add it to my blog this weekend.
- Richard
Interesting article — I well remember the heady days when it seemed like CMGI would become GE.
One quibble: “Therein lays” should be “Therein lies.”