Banks & Brokers - at a disadvantage to Hedge Funds - we'll set up our own; where? Off Balance Sheet and look what happened

and that's pretty much the reason for the hockey stick era.

Since Hedge Funds and banks and brokerages were all competing to make money in "the capital markets" - it became clear that hedge funds had clear advantages - except one; they could not directly execute their own trades or properly custody their own securities; hence Prime Broker operations became large sources of revenues (and ideas and strategies) and the parade of traders OUT of the regulated world of banks and brokers into the UNregulated world of hedge funds; replete with customized performance fees and contracts; the ability to create a fund at whim; without registration and raise money - although not directly from john q public - but accredited investors; note that Reg D (for I doubt if it ever happens) - if even one hf investor is deemed unaccredited it may imperil the entire fund's legitmacy.