WEST PALM BEACH, FL (HedgeCo.Net) – The Securities and Exchange Commission�s public comment period for hedge fund regulation ended on September 15, with little questions answered. Following theinitial passage of the SEC�s hedge fund proposals, the SEC invited comments from the general public before it takes a final vote on the matter. However, the process that began with many unansweredquestions still has left many of such concerns unresolved.
According to published reports, the SEC received about 60 public comments on the hedge fund regulation initiative. Other groups have asked for an extension of the 45-day time limit established by the SEC. The new controversial hedge fund regulation has been largely objected by hedge fund industry trade groups and associations, while outside groups such as the mutual fund organizations support such regulation.
The SEC commissioners would ultimately vote upon the proposal, but when this vote would be taken still remains unanswered. The new proposal requires a simple majority vote of the SEC five commissioners to become law. According to industry analysts, the vote will likely be undertaken early in 2005. The outcome of the vote is expected to be similar to the initial vote in which Chairman William Donaldson voted along with two democratic members of the commission to pass the proposals in a 3-2 vote.
Donaldson has aggressively supported the hedge fund regulation initiative, despite oppositions from some members of congress, Alan Greenspan, and hedge fund industry trade groups. The SEC decision requiring US mutual funds to appoint outside chairmen have been challenged by the US Chamber of Commerce, contending that the SEC exceeded its regulatory powers in making such laws.
Some legal experts agree that such laws have the potential to impact the US financial markets, particularly in the fund growth arena. Others question if the SEC had the powers to make these laws in the first place. There is some expectation that if the SEC commissioners votes affirmatively, such decision would likely end up in the courts. One can assume that the resolution of this matter is years away, and the US courts will provide the ultimate answer.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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