The hedge fund landscape changed dramatically in 2008 with assets under management in severe decline, the imposition of redemption gates, NAV suspensions and general restrictions on investor withdrawals being imposed on a scale that was previously unseen. As Lord Turner, Chairman of the UK Financial Services Regulatory Authority, noted, although specific national banking crises in the past have been more severe, none have had the global impact of the 2008 financial crisis.
The 2008 financial crisis has led to increased investor demands for higher levels of regulation. As a result, financial regulation has risen to the top of the political agenda. While it is widely acknowledged that hedge funds neither caused nor played a significant role in the 2008 financial crisis, concerns regarding the impact of highly leveraged funds on the stability of a financial system and the perceived lack of transparency associated with hedge funds meant that increased regulation of hedge funds was inevitable.