# kaal:claim:3405660-001

**Claim.** Direct hedge fund regulation faces a two sided trap: strong direct rules push hedge funds offshore where they escape regulation altogether, while weak rules leave investors without adequate protection.

**Type.** failure  **Support.** argued

**Holds when.**

- regulators rely on national direct regulatory tools
- hedge funds retain the option to relocate offshore

**Source quote.**

> Yet, regulators are faced with the problem of jurisdictional arbitrage, i.e. if they regulate directly, hedge funds may relocate offshore and escape from regulation altogether. If regulators impose weak regulations, investors may not be afforded adequate protection.

**From.** Kaal, *Indirect Regulation of Hedge Funds* (2019), I. Introduction, page 3

**Cite as.** Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660

**Verify.** sha256 of source PDF `cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20-%202019%20-%20Indirect%20Regulation%20of%20Hedge%20Funds.pdf

**Failure mode.** jurisdictional arbitrage trap  (family: regulatory-arbitrage)

**Topics.** private-funds, law-and-legal-systems

**Keywords.** hedge-fund-regulation, jurisdictional-arbitrage, direct-regulation, investor-protection

**Related claims.**

- extends: https://wulfkaal.github.io/claims/1806252-034
- extends: https://wulfkaal.github.io/claims/1806252-024

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