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Guardian Unlimited – A U.S. Senate bill to make the $1.3 trillion hedge fund industry more transparent would give federal regulators the authority to require fund managers to register with the Securities and Exchange Commission, one of the bill’s authors said on Monday.
Earlier this year, Republican Senator Charles Grassley and Democratic Senator Carl Levin introduced the legislation but wording in the bill sowed confusion among hedge fund advisers.
Breitbart.com – Banking giant UBS Wednesday defied pressure to name about 50,000 Americans holding secret bank accounts in Switzerland as the nation’s financial culture came under a withering fire.
US senators accused bankers at crisis-wracked UBS of helping wealthy Americans to flout US tax law through a variety of underhand methods down to encrypted laptops and lies to US customs officers.
But while acknowledging wrongdoing under a deal last month between UBS and US prosecutors, a top executive with Switzerland’s biggest bank said it could provide no more than 250-300 names of US account holders already handed over.
Mark Branson, the Zurich-based chief financial officer of UBS Global Wealth Management and Swiss Bank, said the group was already shutting down US-owned securities accounts and paying a 780-million-dollar fine to the US government.
"We believe that UBS has now complied with the summons to the fullest extent possible without submitting its employees to criminal prosecution in Switzerland," he told a hearing of the Senate investigations subcommittee.
Grilled by the panel’s Democratic chairman, Carl Levin, Branson said up to 48,000 accounts were held in Switzerland by US clients but that Swiss law precluded UBS from divulging any more names.
But Levin, accusing the British-born banker of being "needlessly evasive," said UBS had made a "declaration of war… against honest, hard-working taxpayers" through its illegal practices in the United States.
Broadening the fight to take in the Swiss government’s jealous protection of its banking secrecy law, the senator said: "We’re determined to fight back and end the abuses inflicted on us by those tax havens."
Under its settlement with the US Justice Department, UBS last month admitted to tax fraud by inviting rich US clients to open accounts in Switzerland and so evade declaring their income to the Internal Revenue Service.
Under its interpretation of the two nations’ tax treaty, UBS said it could only cough up the identities of 250 to 300 US account holders.
Investment Consultant – Reports that U.S. Sens. Carl Levin’s and Charles Grassley’s new bill on hedge fund regulation will force funds to publicize the names of clients are untrue, the senators said.
"Contrary to some press reports, the Grassley-Levin bill to regulate hedge funds does not require the disclosure of hedge fund clients who merely invest in the fund," they said. "Instead, the bill requires disclosure of a hedge fund’s beneficial owners who profit from the fees generated in operating the fund. Such ownership information has already been requested and provided on a routine basis for years in the voluntary hedge fund registrations filed with the Securities and Exchange Commission."
International Herald Tribune – Two senior senators have introduced legislation to impose U.S. government oversight on hedge funds.
The legislation by Senator Carl Levin, a Democrat of Michigan, and Senator Charles Grassley, a Republican of Iowa, was filed Thursday while the administration of President Barack Obama prepared a broader legislative overhaul of the regulatory system, including an effort to regulate hedge funds more tightly.
State regulators and a panel created by Congress to oversee the $700 billion Troubled Asset Relief Program issued separate but similar regulatory proposals Thursday. The proposals also seemed to mirror closely many of the provisions that administration officials say will be part of their plan.
New York (HedgeCo.Net) – Two senators are pushing for greater regulation of hedge funds, introducing legislation that would call on the U.S. government to oversee them.
Michigan Senator Carl Levin, a Democrat, and Iowa Senator Charles Grassley, a Republican, passed the legislation on Thursday, amidst a much broader attempt by President Barack Obama to vamp up the entire regulatory system. It also comes at a time when the administration is still in talks over how to distribute the remaining $350 billion in the Troubled Asset Relief Program.
“We need to regulate firms that are big enough to destabilize our economy if they fail," said Levin. "It’s time to subject financial heavyweights like hedge funds to federal regulation and oversight to protect our investors, markets and financial system."
The overhaul of the regulatory system is intended to restore faith in an economy that has been shaken by fear. In addition to tighter regulation of hedge funds, the broader plan will include greater oversight of mortgage lenders and credit rating agencies.
Regulation of hedge funds has long been a debate in the financial world. While some push for greater transparency, hedge funds have taken the defensive, saying that they provide plenty of transparency to their clients, with performance reports and other data usually available via a secure website. However, the collapse of many major hedge funds along with the handful of fraud cases has forced the government to try again.
The closest that hedge funds have come to regulation was when they were required to register as investment advisors with the U.S. Securities and Exchange Commission. That requirement was overturned in 2006.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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