WEST PALM BEACH, FL (www.hedgeco.net) – The Chairman of the US Securities and Exchange Commission {SEC}, Mr. William Donaldson has told a Reuters news correspondent in an interview in DavosSwitzerland, that the SEC must be ready for a fund financial crisis if necessary. According to Donaldson, “There is no way we cannot take a look at a $1 trillion industry, two years down the pikewhen something blows up, and it surely will, the SEC would be really nailed for not being on top of this.”
Chairman Donaldson was referring to the upcoming US Hedge Fund Industry laws which are due to go into effect February 1, 2006. The new laws require US Hedge Fund Managers overseeing over $30 million in assets with over 15 clients to register with the SEC. But there is an exemption in the law which offers managers willing to lock up client�s money for a minimum of two years to avoid such registration.
According to Donaldson, there is no way to know how many managers will be taking advantage of such loophole. Donaldson added, “Rules and laws are not forever. If you write something today that makes sense and somehow people devise a way around it, then you change the rule, if the getting around the rule has an evil intent,” according to him. It is estimated that about 50 percent of the US Hedge Fund Managers have already registered with the SEC.
Hedge Funds continue to grow from one year to another, as they take in more investor management assets every quarter. Latest information shows that the Global Hedge Fund Industry gained $79.6 billion in 2004, pushing their total assets to well over $1 trillion.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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