The rule grandfathers existing funds that have represented themselves as venture capital funds “because it could be difficult or impossible for advisers to conform existing funds, which generally have terms in excess of 10 years, to the new definition.”
What happened is that the VC community went to the regulators in inserted an illiquidity in the system, an asymmetric trade in which federal police enforce the unbalanced trade, in favor of grandfather fund holders.
If regulators continue to insert destabilizing policies, then eventually the economy has to adapt by overthrowing the regulators.
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