WEST PALM BEACH, FL (HEDGECO.NET) – Members of the US hedge fund industry have expressed skepticism about the hedge fund rules approved on Tuesday by the Commissioners of the US Securities andExchange Commission. There were no surprises here, because the split 3-2 vote follows the same pattern as the preliminary vote in which the SEC Chairman William Donaldson joined two democraticcommissioners in passing the law, while the two republican members remain opposed to the new proposals.
Michael Mavrides, a partner in the hedge fund group at Bryan Cave LLP., commenting about the new passed law said, “I think that many managers are going to see a significant increase in their costs of doing business, it’s a growing industry, and I think the SEC doesn’t really know that much about (it).”
The new approved law will take effect in February 2006. Hedge fund companies will be required to designate a special chief compliance officer whose duty is to manage such affairs. US hedge funds will also be mandated to adopt a special code of ethics to guide their activities. They will also provide yearly audited reports to the Securities and Exchange Commission office as well as to the investors in their portfolios.
Some hedge fund industry analysts do not believe this law will accomplish much. In fact, many see such law as an expensive bureaucratic exercise which may not prove effective in combating fraud. In a statement released by the Managed Funds Association, [MFA] one of the leading watchdog groups for the hedge fund industry, the organization said, �it reiterates its deep concerns regarding ramifications of the new rules, and … the case for increased regulation of hedge funds has not been made.”
The MFA however said it will still continue to work more closely with the SEC to see that the new administration does not in any way hinder or impede the development of the US hedge fund industry.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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