WEST PALM BEACH, FL (HEDGECO.NET) – The venture capital industry has raised some concerns regarding the Security and Exchange Commission�s plans to regulate the US hedge fund industry. The industryobviously hopes that venture capital companies are not next in line to fall into the SEC regulatory net. The president of the Venture Capital Association Mark Henson explained that the definition ofhedge funds by the SEC may be interpreted to include venture capital firms.
Henson said, “We were told by the SEC that it was not their intent to regulate us, but when the proposal came out, we became very concerned because, given a liberal interpretation of the rules, it seemed we could be brought into the fold after all,� according to him.
Although there are some similarities between hedge funds and Venture capital companies, there are sharp differences between both industries. Hedge funds conduct their businesses in stock and derivative markets, investing assets; venture capital firms do not trade assets in the markets. They are engaged with new start up businesses, helping such new start up ventures get off the ground.
There have been no public statements from the SEC to support any inclusion of venture capital firms into the regulatory net of the agency so far. Henson said, “Our concern is that a court of law might see it that way, or in five or 10 years there could be a different regime which wants to include us. We don’t want to open that possibility.”
The hedge fund regulatory proposal comes up for the final vote after September 15. So far, the hedge fund industry has been somehow mute over this matter. About 50% of the US hedge fund industry has voluntarily registered with the SEC to date, according to published reports.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
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