Mutual funds are regulated by the SEC while hedge funds are not regulation in general This is simply wrong Investment Advisers the managers of hedge funds in the US are governed by the Investment Advisers Act of 1940 There are many aspects of the Act that apply both to registered and unregistered advisers The most important of these provisions are anti fraud measures The SEC enforces the Act Registered IAs can count on a visit from the SEC on a schedule determined by the adviser fund s perceived riskiness To try and draw some kind of distinction between an adviser being regulated and a fund being regulated is pointless when the SEC visits they are empowered to review all aspects of an adviser s funds The SEC can use Rule 206 4 8 under the Act to come in and look at an unregistered adviser s funds as well More it is ludicrous to state that hedge funds are largely unregulated although this phrase is repeated in the popular press frequently In the US hedge funds may be regulated by the SEC CFTC FINRA various SROs and exchanges state securities regulators the Department of Labor and maybe others In addition to the Act hedge funds are regulated under the Investment Company Act for exclusion from the definition of an Investment Company and the Securities Act of 1933 Regulation D concerning sales of private securities Any trading by direct investment hedge funds is subject to all the rules of FINRA and the exchanges If anything regulation in the UK is even stricter Solid regimes exist in other jurisdictions including Cayman and Bermuda In short it is the case in the US and the UK among other major venues that hedge funds are highly regulated pools of capital I will propose changes to the article as time permits