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Post by diamondmiser on Jul 24, 2006 22:38:59 GMT -4
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Post by BigPuddin on Jul 24, 2006 22:43:51 GMT -4
SEC's Cox Seen Letting Hedge Fund Rule Die By Siobhan Hughes Dow Jones WASHINGTON (July 24) - Securities and Exchange Commission Chairman Christopher Cox is expected to announce on Tuesday that the agency will refrain from appealing a court decision to throw out a controversial hedge fund regulation, according to three people familiar with the matter.
The announcement is expected to come when Cox testifies before the Senate Banking Committee. He will address his congressional overseers less than five weeks after a three-judge federal appeals court unanimously voided the rule, which starting in February required managers of large hedge funds to register with the SEC for the first time and undergo routine inspections.
Hedge fund regulation has become a hot political topic as the industry has grown rapidly with minimal oversight. Hedge fund managers have hoped to avoid new regulations they perceive as costly and intrusive. But some people warn that the amount being invested through hedge funds, coupled with the participation of pension funds in the hedge fund investments, necessitates stricter oversight.
"As pension plans have increased their exposure to hedge funds, there have been some concerns that 'Moms' and 'Pops' who otherwise would not be qualified investors might be exposed in unacceptable ways to the risks of hedge fund investments," said Jim McCarroll, a lawyer at Reed Smith LLP who represents hedge funds and wealthy families who invest in such vehicles.
Cox is expected to emphasize plans to work with fellow regulators through the President's Working Group on Financial Markets, an interagency group set up after the 1987 stock market crash to coordinate on financial policy. That same group in 1999 stopped short of calling for new rules for the hedge fund industry in a report issued after the near-collapse of Long-Term Capital Management LP in 1998.
It has become a matter of faith in top Washington regulatory circles that hedge funds - lightly regulated vehicles marketed to wealthy investors and institutions - are best left to their own devices. Only last week, Federal Reserve Chairman Ben Bernanke told the House Financial Services Committee last month that "market discipline" is the best way to supervise the activities of hedge funds. He said hedge funds provide "important positive benefits" by ensuring liquidity - or a ready supply of buyers and sellers.
Cox has yet to make plain his thinking. If he decides against appealing the decision by the U.S. Court of Appeals for the District of Columbia Circuit, he could be left open to criticism that he is reversing a policy put in place by his predecessor William Donaldson. Even so, many people believe that an SEC challenge would have been futile, given that the appeals court's decision was unanimous, leaving the agency with little wiggle room.
"The commission could seek review of this decision," SEC Commissioner Paul Atkins said in a speech last month. "Or, we could try to find another way, within the confines or our statutory authority, to require hedge funds to register. Given the current circumstances, I cannot imagine a scenario under which we would pursue either course of action."
Already about 16 hedge fund managers have filed to pull their registrations with the SEC, spokesman John Heine said. And some people in the hedge fund industry say they see little political fallout from letting the court's decision stand. Lawmakers understand the hedge fund industry's interest in having clearly defined rules of the road, these people say.
"I don't think it's a political issue," said Lisa McGreevy, chief operating officer at the Managed Funds Association, which represents hedge funds. "I think you'll have members on both sides of the aisle who are looking for a path to certainty. The industry is looking for a path to certainty."
The main source of tension on Tuesday may come from questions about the SEC's handling of an insider-trading probe of the prominent hedge fund Pequot Capital Management. In June, former SEC enforcement attorney Gary Aguirre went public with claims that his supervisors blocked him from seeking testimony from Morgan Stanley (MS) Chief Executive John Mack , who is a longtime friend of Pequot head Arthur Samberg.
Last week, days before the Senate hearing, the SEC reversed course and asked for testimony from Mack. The SEC's inspector general also reopened an investigation into Aguirre's claims. The inspector general had earlier concluded there was no evidence to show that SEC officials had granted Mack favorable treatment because of his power and influence.
In a letter to the Senate Banking Committee, Aguirre called on lawmakers to " put the tough questions to Chairman Cox." Aguirre wrote that the reopening of the SEC inspector general's investigation was "a red herring tossed out by the SEC to draw your committee away from exercising its duty to the public."
John Nester, an SEC spokesman, said that Cox asked the inspector general to reopen the investigation "because it's important that the public has confidence in the fairness and thoroughness of the process." As for the decision to request an interview with Mack, Nester said that the timing of enforcement division " investigatory steps depends solely on established procedures with every consideration to fairness and due process."
Copyright (C) 2006 Dow Jones & Company, Inc. All Rights Reserved. 07/24/2006 19:09 -04
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Post by jannikki on Jul 25, 2006 6:12:58 GMT -4
First Chairman Cox shelved the journalists subpoenas....and now he doesn't want to appeal the court decision on Hedge Fund registration. In other words, he doesn't want to do his job, which is the norm for this Commission.
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Post by justjanet on Jul 25, 2006 9:50:02 GMT -4
Could these billion dollar Hedge Funds think of a better reason to fight being regulated than "they perceive (regulation) as costly and intrusive" ? What a lame argument . . . . . JustJanet
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Post by meeke on Jul 25, 2006 11:11:35 GMT -4
Could these billion dollar Hedge Funds think of a better reason to fight being regulated than "they perceive (regulation) as costly and intrusive" ? What a lame argument . . . . . EVERY Public Company (large or small) could use that excuse for the SEC REGS. JIM JustJanet
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gs27
Diamond Driller
Posts: 110
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Post by gs27 on Jul 25, 2006 11:15:09 GMT -4
burn em at the stake !
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gs27
Diamond Driller
Posts: 110
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Post by gs27 on Jul 25, 2006 11:27:17 GMT -4
One could only hope that in the end, they'll do the right thing ! I won't be crossing my fingers on that !
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Post by diamondmiser on Jul 25, 2006 19:28:13 GMT -4
Back to the drawing board on hedge funds sounds like same "RAT" channel; same "RAT" time. We'll still be at this place same time next year. with the SEC looking out for big business' interests, Senate committees arguing amongst themselves while the rich get richer and the poor get poorer.
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Post by canudigit on Jul 25, 2006 21:46:33 GMT -4
Hedge funds and the fed reserve.Perfect together.
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