WEST PALM BEACH, FL (HEDGECO.NET) – Some lawyers think the SEC is ready to announce new hedge fund laws; the new laws will mandate hedge funds to register with the SEC, thus bringing an era ofloosely regulated activities of hedge funds to an end. According to Marianne Smyth, a partner at Wilmer Cutler Pickering Hale and Dorr LLP, the new laws for hedge funds are imminent. Smyth said, �Iexpect the U.S. Securities and Exchange Commission will propose a rule that may include hedge fund regulation in the next weeks; there is a sense of high alarm at the SEC.� she added.
In a recent statement, SEC Chairman William Donaldson said �Given the rapid rate of growth of hedge funds, the size of their assets … and the involvement of some hedge fund managers in illegal behavior, the Commission staff is evaluating a form of registration and an oversight regime for hedge fund managers.�
Hedge funds have historically conducted their trading activities with limited regulatory oversight, but worries about the growth of retail hedge funds such as fund of hedge funds. In addition to transparency, and the recent mutual fund trading scandals, and other matters have led the US Securities and Exchange Commission under the leadership of Chairman William Donaldson to vow to bring hedge funds under the regulatory arms of his agency.
Now it seems the SEC is ready to unveil such laws, an unidentified source said time is of the essence because the SEC wants these laws made public now so as to allow for public comments in time for a final ruling before the US presidential election this fall.
Members of the hedge fund industry have objected to such regulations, maintaining that hedge funds have policed themselves well, and have improved transparency to investors. Some hedge fund industry analysts and participants still believe that the SEC proposals have encountered significant resistance from not only the hedge fund watch dog groups, but also from prominent US government agency leaders such as the Federal Reserve Chairman Alan Greenspan.
The SEC laws were initially expected this past March, but nothing has been made public yet, leading some to speculate that such proposals have run into a cul de sac. The SEC plans to hire additional staff, in addition to the exponential hedge fund asset growth recorded recently has added momentum to the expectations that the SEC is ready to act.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: [email protected]
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