Subject: File No. S7-25-06
From: Angus McKinnon, CFA
Affiliation: Chartered Financial Analyst

January 27, 2007

On the surface the asset test for investment into hedge funds appears practical. In reality it fails to recognize a number of facts: the hedge fund industry is global and investors can simply invest via an overseas hedge fund thus bypassing the rule anyway, the "retailization" of hedge funds is inevitable and obviously happening around the world irregardless of SEC rulings, individual often are indirectly invested in hedge funds via the pension fund administrators allocation, and finally similar regulation has not been enacted or found to be necessary in other places in the world which causes one to wonder why regulators think it necessary in the US (are the regulators so vain as to think they are have to protect those less "sophisticated" or do they just think US investors are stupid - I think US investors are probaby amongst the most well educated in investment in the world). Appropriate warnings to investors and sufficiently stringent provisions against fraud would be more useful and effective.