WASHINGTON (MarketWatch) — In a blow to the government’s move to regulate hedge funds, a federal court threw out a rule requiring advisers of those investment pools to register with regulators as investment advisers.
The U.S. Court of Appeals for the District of Columbia Circuit said the Securities and Exchange Commission rule is “arbitrary” since it exempts funds with one hundred or fewer investors from Investment Company Act regulations but compels registration for those with fifteen or more investors under another act.
The suit was brought against the SEC in late 2004 by Pleasantville, NY-headquartered Opportunity Partners.
Under rules introduced in late 2004, the SEC required all hedge funds with more than 14 investors and $25 million in assets to register as investment advisers.
