New York Times – A federal appeals court on Friday sharply questioned the Securities and Exchange Commission’s plan to tighten oversight of hedge funds.
The outcome of the closely watched case will determine whether the agency will be able to oversee many hedge funds as the business is growing rapidly, with big investors from university endowments to pension plans pouring billions of dollars into the funds. The notable troubles of some hedge funds – most recently the collapse of Bayou, a Connecticut hedge fund, this summer – have inspired calls for greater regulation.
The outcome of a case cannot always be predicted based on questions posed by judges in oral arguments. But the dialogue on Friday involving two of the three federal appeals judges and the lawyers suggested that a majority of this panel had significant questions about the way the commission has sought to impose new oversight on a business that now accounts for an estimated 10 to 20 percent of all stock trading volume in the United States.
