Tuesday, November 23, 2010
Larry Ribstein (Illinois) has some thoughts at Truth on the Market about new SEC rules designed to bring hedge funds and venture capital outfits under regulation. Here's his take:
The [new] rule grandfathers existing funds that have represented themselves as venture capital funds “because it could be difficult or impossible for advisers to conform existing funds . . . to the new definition.”
But the SEC feels comfortable locking new funds into terms that could constrain their activities for long periods in a dynamic investment environment. . . . The costs associated with this inflexibility are especially problematic given VC funds’ need to adjust to the drop in initial public offerings, which traditionally provide a critical opportunity to exit from investments.
Real unemployment is climbing toward 20% and new firms with new ideas can create jobs. Venture capital is a key mechanism for funding start-ups. Somebody should pass this information onto the SEC.