1) The Volcker Rule is not in the Bill (House or Senate).  This conceivably would have helped our independent hedge funds because the banks would not have been able to manage their own funds.

2) The bigger problem on the horizon for these guys is that there is language in the Jobs Bill the House is slated to pass next week which would tax carried interest as income not capital gains.  The speculation is that there will finally be support in the Senate this year for this language where there hasn't been in the past.  There is an exemption for carried interest on invested capital, but carried interest from other investors will be taxed as income (from 15% to approx. 37%).

3) Izzy may also be concerned with the attacks on High Frequency Trading.  I need to confirm, but I believe Ted put language into the bill which directs the SEC to study HFT and come back to Congress with a plan to regulate it better.  It is not binding on the SEC in anyway, but there clearly will be an effort to have the SEC regulate it more closely now.




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Eric D. Schwerin
Rosemont Seneca Partners
(202) 333-1880
eschwerin@rosemontseneca.com