WEST PALM BEACH, FL (HEDGECO.NET) – The Securities and Exchange Commission [SEC] seems to be backing off from some of the agency�s proposals about regulating the US hedge fund industry. The tone ofChairman William Donaldson has softened somewhat with the regards to the question of regulatory oversight for US hedge funds. According to published reports, Donaldson said he has ordered his staffto prepare for a ruling on the issue earlier in March.
Recent statements from the SEC boss include significant changes in language. SEC staff recommended that the US based hedge fund managers be subjected to regulatory oversight; US based hedge fund managers will be required to register with the office of the SEC as investment advisers.
On April 8, testimony to the Senate Banking Committee, Donaldson said his staff has been asked to prepare a �rulemaking proposal that will enhance the commission�s ability to prevent, detect and deter abusive, fraudulent conduct in the hedge fund segment of the investment management industry.�
He further said, �As part of this rulemaking…we could consider both a form of registration for hedge fund managers and an oversight regime different from that which we use for other, more heavily regulated industries, like mutual funds. They could be specifically tailored to the unique dynamics of these types of managers. We could thus better target our inquiries on those hedge fund managers where there is some reasonable concern that they may be violating the securities laws.�
This phrase �could be specifically tailored to the unique dynamics of these types of managers, was not particularly mentioned in the original proposal� and also �better target our inquiries on those hedge fund managers where there is some reasonable concern� seems to be defining a smaller segment of the hedge fund industry.
It should be recalled that the SEC commissioners are divided on this issue. According to published reports, two members of the commission remain opposed to this proposal, and other prominent actors in the US financial market arena such as the New York Attorney General Elliott Spitzer and US Federal Reserve Chairman Alan Greenspan have not endorsed such a proposal.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: [email protected]
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