Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Monday, January 29, 2007

SEC Commissioner Atkins on Hedge Fund Regulation

SEC Commissioner Paul Atkins spoke on hedge fund regulation at the Ninth Alternative Investment Roundup on Jan. 29.  He reviewed the history of attempted regulation of hedge funds, including the SEC's controversial rule -- invalidated last summer by the D.C. Circuit -- that would have required registration of hedge fund advisers.  He also discussed the narrower proposed rule put out for comment in December which will clarify the SEC's authority to bring enforcement actions against investment advisors for fraud against investors and will narrow the pool of investors eligible to invest in hedge and private equity funds.  On the latter, the Commissioner expressed concern about the rule as a barrier to entry for newly established hedge fund advisors.

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I have always taken the view that hedge funds need scrutiny and regulation. It is to the benefit of the consumer that there is full disclosure along the way. Although there are many myths about hedge funds that are not true, like they are full of lofty managers aimed at hurting the economy when if fact they are serving to make it more efficient and stable.

Hedge Funds by name are kind of misleading. I think what needs to happen in American regulation is that we distinguish between what traditionally would be known as hedging, protecting ones capital, and an Investment Fund that takes positions in the markets. It would be nice to have some legislation clarify the difference. They have Investment Funds in Ireland and I think that this is what they should properly be called.
Evan Andersen
Lydia Capital

Posted by: Evan Andersen | Feb 26, 2007 3:03:53 PM

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