Cantor Fitzgerald

Anthony Orso Comments: Fundamental Transformations in Store for Alternatives Managers

August 23, 2010, Pensions & Investments

Financial reform will have a major impact on how the alternative investment management business will be played and who the players will be.

While specific rules have yet to be set, the reforms called for in the Dodd-Frank Wall Street Reform and Consumer Protection Act could affect everything from investment returns to leverage and risk-taking to innovation and transparency of private equity, real estate and hedge fund managers. Big financial services firms will have to decide what lines of alternatives businesses they will retain and how they will be structured. Smaller firms might have to deal with Securities and Exchange Commission registration, giving the world — and regulators — a peek at their investment strategies.

Institutional investors worry that registration with the SEC could inhibit investment innovation by midsize private equity, real estate and hedge fund managers, Mr. Kahn said. Many larger alternatives firms already are registered and it is yet to be seen whether the real estate investment managers will be exempt from the requirement.

Anthony Orso, New York-based executive managing director and CEO of Cantor Commercial Real Estate, expects new rules forcing banks to own a portion of the securities they are selling “will make financial institutions less likely to want to originate loans.”

Cantor Commercial Real Estate was formed earlier this month by Cantor Fitzgerald and real estate investment firm CIM Group to offer real estate and mezzanine loans, which the group intends to securitize into commercial mortgage-backed securities.

The reforms “will affect banks but not specialty real estate finance companies such as CCRE,” Mr. Orso added in an e-mail response to inquiries.

CCRE was not formed in anticipation of financial reform, but additional financial regulations ”will make it harder and harder for them (banks) to compete,” Mr. Orso said in an interview when he announced the firm's formation.