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The Great Hedge Fund Deregistration

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The Wall Street Journal reports that more hedge fund managers are taking themselves out of the now completely voluntary SEC registration. The real question isn't why so many hedge funds are backing out but why so many have remained registered. Why potentially subject yourself to additional SEC oversite if it's not required? As far as we can tell, there is just about zero investor demand or premium for registered hedge funds.
Oh, wait. Now we remember why. It's because you probably have to get the lawyers on the phone to deregister. And why talk to lawyers when its not absolutely necessary?
From the Journal:

Dozens more hedge-fund advisers withdrew from registration with the Securities and Exchange Commission in the past three months, adding to the effects of a June court decision that tossed out an SEC rule requiring registration.
Some 275 hedge-fund advisers have withdrawn from registration with the SEC since an appeals court said the rule was arbitrary and couldn't stand, according to SEC statistics gathered as of Dec. 7. That is up from 106 that were withdrawn as of Sept. 14.
Federal regulators for now are taking small steps instead of pushing for oversight powers associated with registration. Wednesday, the SEC proposed raising to $2.5 million the amount in financial investments held by an individual before he or she invests in a hedge fund. The SEC also proposed barring hedge-fund advisers from defrauding investors as the agency seeks to regain some powers called into question by the appeals court's decision.

More Hedge Funds Leave the Ranks Of SEC's Registry [Wall Street Journal]