Registration not only way for hedge funds

NEW YORK (Reuters) - There may be ways for U.S. lawmakers to keep a closer eye on hedge funds, the loosely regulated portfolios, without forcing them to register with the government, hedge fund manager and short seller James Chanos said on Wednesday.

Concern about hedge funds' potentially risky investment styles is growing anew in Washington as the industry's assets have doubled to roughly $2 trillion, especially as more pension funds invest the retirement benefits of average Americans.

While some lawmakers may again push for hedge funds to register with the U.S. Securities and Exchange Commission -- a federal court last summer vacated the SEC's registration rule -- hedge fund managers generally agree that registration is no cure-all to eliminate risk.

"I think there will be repeated efforts to re-examine registration," said Chanos, who runs hedge fund Kynikos Associates and last year founded the Coalition of Private Investment Companies, an industry trade group.

"But there may be ways to get Washington what it wants without registration," Chanos said at the Reuters Hedge Funds and Private Equity Summit on Wednesday.

Hedge funds might be able to update annual questionnaires with more detailed information about what they do, Chanos said. Also, last month Chanos and other hedge fund managers told lawmakers they would not oppose requirements to keep better records.

Less than one year after the SEC's registration rule was struck down, hedge fund managers agreed it had no power to prevent fraud or stop people from losing money.

"It makes people feel better when lawmakers say they will make hedge funds register, but what is registration actually going to do? It is a canard," said Barry Rosenstein, who founded hedge fund Jana Partners, speaking at the summit.

Chanos said separately that Long Term Capital Management, the Connecticut fund that collapsed in 1998 and ranks as the second-worst hedge fund disaster, was registered.  Continued...