On January 29, 2009, Senators Carl Levin (D-MI) and Charles Grassley (R-IA) introduced the Hedge Fund Transparency Act (HFTA) for passage in the Senate.  The HFTA is intended to require hedge funds to register with the Securities and Exchange Commission (SEC) and thereby subject them to regulation by that body.  As currently drafted, however, the HFTA proposes amendments to the Investment Company Act of 1940, as amended, which would require any private investment fund with $50 million or more under management to register with the SEC and meet certain disclosure obligations.  Catastrophe or “cat” bond transactions are issued by a special purpose entity which would come within the revised definition of investment companies proposed under the HFTA.  Thus far, introductory remarks on the measure have been made by the sponsors and the HFTA has been read twice and referred to the Committee on Banking, Housing and Urban Affairs.  If enacted, the regulatory obligations of private investment funds with $50 million or more under management, including cat bond issuers, would increase substantially.  In a guest article, Malcolm P. Wattman, a Partner at Cadwalader, Wickersham & Taft LLP, explores the potential consequences of the HFTA for cat bonds.