Post by kranker on Nov 11, 2006 19:57:00 GMT -4
SEC to urge tougher hedge-fund investor rules
By Bloomberg News | November 11, 2006
NEW YORK -- The Securities and Exchange Commission will propose rules next month raising asset requirements for investing in hedge funds after Amaranth Advisors LLC lost $6.5 billion on bad natural gas trades.
The changes will be proposed to the SEC's five commissioners at a meeting in Washington, Chairman Christopher Cox said in an interview. He didn't specify how the agency might limit the pool of hedge-fund investors.
"We're going to make it very clear that hedge funds are risky investments that are not for mom and pop by fencing it off with higher standards to accrediting investors," Cox said.
Hedge funds are open to individuals with at least $1 million in assets or at least $200,000 in income for the past two years, and to institutions like insurance companies, mutual funds, and pension funds. Since the September collapse of Greenwich, Conn.-based Amaranth, lawmakers have become concerned that a hedge fund meltdown could put pension fund investments at risk.
Cox said the SEC will also propose a new hedge-fund antifraud rule at the meeting. Hedge funds are private pools of capital that allow managers to share substantially in investment gains.
Senate Finance Committee Chairman Charles Grassley has asked Cox and Treasury Secretary Henry Paulson to figure out ways to boost transparency in the $1.3 trillion hedge-fund industry, which is largely unregulated. Grassley said in a letter Oct. 16 that "hedge-fund investments could put the retirement security of American workers in jeopardy."
A federal appeals court in June shot down rules requiring hedge funds to register with the SEC. The agency wanted funds to report their size, number of employees, and types of clients, and submit to random inspections.
The SEC this week accused a California hedge fund manager of cheating 18 investors, including senior citizens, out of $5 million. The agency said Edward Ehee persuaded people to invest in funds that had ceased operating .
Cox said in the interview that control of Congress by Democrats shouldn't impede efforts to revise the Sarbanes-Oxley corporate governance law. At a Dec. 13 public meeting, the SEC will propose guidelines to help interpret the law in a way that saves companies time and money, he said.
"The concerns that we've heard expressed on behalf of investors and small companies, and on behalf of the marketplace in general, have come roundly from Democrats and Republicans," Cox said.
Cox, a Republican, said the SEC may soon bring another enforcement case for stock-option backdating. Lawmakers have questioned whether the agency has enough resources to investigate a scandal that has touched more than 100 companies.
www.boston.com/business/markets/articles/2006/11/11/sec_to_urge_tougher_hedge_fund_investor_rules?mode=PF
By Bloomberg News | November 11, 2006
NEW YORK -- The Securities and Exchange Commission will propose rules next month raising asset requirements for investing in hedge funds after Amaranth Advisors LLC lost $6.5 billion on bad natural gas trades.
The changes will be proposed to the SEC's five commissioners at a meeting in Washington, Chairman Christopher Cox said in an interview. He didn't specify how the agency might limit the pool of hedge-fund investors.
"We're going to make it very clear that hedge funds are risky investments that are not for mom and pop by fencing it off with higher standards to accrediting investors," Cox said.
Hedge funds are open to individuals with at least $1 million in assets or at least $200,000 in income for the past two years, and to institutions like insurance companies, mutual funds, and pension funds. Since the September collapse of Greenwich, Conn.-based Amaranth, lawmakers have become concerned that a hedge fund meltdown could put pension fund investments at risk.
Cox said the SEC will also propose a new hedge-fund antifraud rule at the meeting. Hedge funds are private pools of capital that allow managers to share substantially in investment gains.
Senate Finance Committee Chairman Charles Grassley has asked Cox and Treasury Secretary Henry Paulson to figure out ways to boost transparency in the $1.3 trillion hedge-fund industry, which is largely unregulated. Grassley said in a letter Oct. 16 that "hedge-fund investments could put the retirement security of American workers in jeopardy."
A federal appeals court in June shot down rules requiring hedge funds to register with the SEC. The agency wanted funds to report their size, number of employees, and types of clients, and submit to random inspections.
The SEC this week accused a California hedge fund manager of cheating 18 investors, including senior citizens, out of $5 million. The agency said Edward Ehee persuaded people to invest in funds that had ceased operating .
Cox said in the interview that control of Congress by Democrats shouldn't impede efforts to revise the Sarbanes-Oxley corporate governance law. At a Dec. 13 public meeting, the SEC will propose guidelines to help interpret the law in a way that saves companies time and money, he said.
"The concerns that we've heard expressed on behalf of investors and small companies, and on behalf of the marketplace in general, have come roundly from Democrats and Republicans," Cox said.
Cox, a Republican, said the SEC may soon bring another enforcement case for stock-option backdating. Lawmakers have questioned whether the agency has enough resources to investigate a scandal that has touched more than 100 companies.
www.boston.com/business/markets/articles/2006/11/11/sec_to_urge_tougher_hedge_fund_investor_rules?mode=PF
