Boston Globe – A new hedge fund registration rule has created extra burdens for the Securities and Exchange Commission without protecting investors, one of the agency’s Republican commissioners saidyesterday.
The new rule has proven ”costly and ineffective,” commissioner Paul S. Atkins said at a gathering sponsored by Boston University’s Morin Center for Banking and Financial Law. In the period before the rule went into effect last month roughly 1,000 hedge fund advisers have filed paperwork to be reviewed by the agency but which won’t do much to deter fraud, he said.
Also, the new rule forces the SEC to police the holdings of perhaps 100,000 hedge-fund investors who tend to be wealthier at the expense of its work overseeing the mutual funds held by 90 million people of more modest means on average, Atkins said. And it creates too many burdens on the funds themselves. While the new policies might seem appropriate, he said, ”a closer look reveals them to be rooted rather tenuously in reality.”
Atkins’s remarks show his continuing opposition to a rule that could wind up under SEC review again depending on how a US Appeals Court in Washington decides an ongoing case challenging the regulation. Although Atkins’ view was outvoted, 3-2, when the SEC adopted the registration rule in 2004, two members of the body are new since then and could make modifications.
