(Adds exemption in eighth paragraph.)
Dec. 14 (Bloomberg) -- Henry Swieca plans to return money to outside investors in his $500 million hedge fund Talpion Fund Management LP that he started two years ago, according to two people with knowledge of the matter.
Swieca, 54, a co-founder of Highbridge Capital Management LLC, is returning about $100 million to outside clients and will continue to manage about $400 million of his own and family money, said the people, who asked not to be identified because all investors haven’t been notified.
Swieca made the decision because of new financial regulations that require firms to register with the U.S. Securities and Exchange Commission by March 2012 if they want to manage money for outsiders, one of the people said. Billionaire George Soros told clients in July that he planned to return their money by the end of this month and turn his Soros Fund Management LLC into a family office.
Steven Lipin, a spokesman for New York-based Talpion, declined to comment.
Swieca will continue to invest in an equity fund that he started in March 2010, a month before he began managing money for outside clients, and may allocate to other asset classes, the person said. He plans to provide startup capital for portfolio managers at his firm, the person said.
Swieca started Highbridge with childhood friend Glenn Dubin in 1992 and left the New York-based firm after 17 years to start Talpion. Highbridge manages about $26 billion.
Twenty-two of 39 money managers surveyed by Infovest21, a New York research firm, said more hedge funds are probably going to become family offices, a designation that will exempt some from the SEC registration rules.
Firms that primarily manage the wealth of a single family will have to register as investment advisers by March 30, 2012, unless they qualify for a new exemption from the SEC.
The rule calls for hedge funds with more than $150 million in assets to report information about their investors and employees, the assets they manage, potential conflicts of interest and their activities outside of fund advising. Registered funds will also be subject to periodic inspections by the SEC.
--With assistance from Jesse Hamilton in Washington. Editors: Christian Baumgaertel, Steven Crabill, Josh Friedman
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