According to an article in The Economist, London attracts more capital and hedge fund managers each year. Mayfair starts to threaten NY's dominance as the hedge fund capital of the world. Higher profitability as well as better regulation are quoted as the reasons behind the change. An interesting quote:

Amazingly, the FSA (the UK financial regulator) has fined only one hedge-fund manager thus far—and that was for just £750,000 ($1.4m). As London catches up with New York, though, this will surely change.

In United States the SEC never hesitate to prosecute even high ranking executives.

Also, I was quite surprised to learn that from 2002 till 2005 assets under management in hedge funds have almost doubled.