WEST PALM BEACH, FL (HEDGECO.NET) – The much talked about vote on hedge fund regulation was finally undertaken by the Securities and Exchange Commission on Wednesday. The vote was 3-2 in favor ofregulatory oversight for the hedge fund industry. As expected, the SEC Chairman, William Donaldson joined the two Democratic members in voting affirmatively for new rules for hedge funds, while thetwo republican members opposed.
According to news reports, Mr. Donaldson read a prepared statement before the votes were taken. He said, “The hedge fund industry is a one-trillion dollar corner along Wall Street with warning signs flashing at us, we simply can’t afford to walk by and ignore it.” Donaldson has defended this point of view in numerous speeches and contacts with the media, in light of mounting objections.
The SEC Chairman had earlier stated that he is concerned that ordinary investors are increasingly exposed to hedge funds through their retirement schemes. New rules, according to him, will enable individuals and institutions to make informed judgments about these investments.
Paul Atkins, a Republican member of the committee has made his opposition to such measure public in numerous instances. Mr. Atkins, along with the second Republican member of the committee, voted against, arguing that laws will create additional burden for hedge funds, and that it may stifle economic growth. Atkins said, “I fear that we are setting off down the road of regulatory overreaction.”
Hedge fund industry participants and watchdog groups have vigorously resisted these proposals, as many of these groups argue that hedge funds have done well in terms of self regulation, and have significantly increased transparency to investors. A spokeswoman for one of the hedge fund watchdog groups, the Managed Funds Association, said there is no need for additional regulatory oversight for the hedge fund industry. According to published reports, more than two-thirds of the largest hedge funds are already registered with the CFTC or other government regulatory agency.
These proposals will now be discussed and debated by all, for a period of two months before the SEC delivers its final vote on the matter.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: [email protected]
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