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During the last 15 years the hedge fund industry has become one of the most creative and rapid growing areas within the financial industry and has made it hard for regulators to mitigate the potential risks posed to investors and the financial system.
In light of the financial crisis, international interest in the supervision and regulation of the financial industry has increased rapidly, particularly with regard to hedge funds and there is no doubt that international and European initiatives will influence hedge fund operations in European and German law.
The aim of this thesis is to introduce the reader from a legal perspective to the general characteristics of hedge funds as well as the existing and expected legal schemes for the operations of hedge funds in European and German law.
The thesis explains the characteristics of hedge fund schemes by describing their origin and terms of hedge funds used. In general, the reader will be introduced to the European and German legal landscape as well as to market participants in the hedge funds business by analysing applicable German law as well the practability of existing EU Directives and Regulations. Furthermore a brief summary of the financial supervisory framework will be presented as well as the role of hedge fund associations.
The reader will also find a chapter analyzing and describing the proposed Directive for Alternative Investment Fund Managers (AIFM) by following its table of contents resulting in a comparative summary on expected European regulation and possible impacts to German law.
Finally, I highlight two conclusions. First on the proposed AIFM Directive, which is still in draft, and therefore a statement of political intent, has no binding effect and I expect that the proposed regulations encompassed in the Directive will evolve significantly prior to the passage of new legislation due to lobbying by hedge fund associations and the United Kingdom (UK) government.
The second conclusion is that Germany is already prepared to provide a regulatory framework for the operations of hedge funds in the context of the AIFM Directive. Also, existing hedge fund providers in Germany are already able to provide the required regulatory infrastructures when entering or offering hedge funds business in Germany, which could result in a competitive advantage to other EU Member States.

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Marco M. Sperlich was born in Aschaffenburg, Germany in 1972.
Education: The author attended the secondary modern school in Aschaffenburg and Dieburg Secondary School graduating in 1993. After passing the German federal armed force in 1994 the author started its studies at the University of Applied Science, Aschaffenburg and graduated in the areas of banking, insurance and properties with a diploma in business administration in the spring of 2000. During the course of its professional career 2007 until 2009, in addition to its full time work, the author completed the master programs - Master of Laws (LL.M.) at Frankfurt School of Finance & Management and Master of International Business & Tax Law (LL.M.) at Management Center Innsbruck.
Professional Experience: In 2000 the author joined Salomon Brothers KAG mbh, a German investment management company and legal entity of Citigroup Inc. in Frankfurt as Business & Financial Analyst. In the autumn of 2003 the author moved to Citibank A

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G in Düsseldorf and was responsible for financial controlling of all Citigroup facilities in Germany and Austria. After 2004 the author accepted a position at Citigroup Global Markets Deutschland AG & Co KGaA in Frankfurt as Fiduciary Compliance Officer Germany and was appointed beginning of 2007 as Vice President of Citigroup Inc.
Reason of the study: As the author was responsible for the Fidurciary Management area in Germany as well as the oversight and monitoring of Citigroup s funds and securities business, the author s scope is to introduce the reader from a legal perspective to the general characteristics of hedge funds as well as the existing and expected legal schemes for the operations of hedge funds in European and German law.

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