SEC Rift Over Hedge Fund Regulation Deepens

by Glen Shapiro, LawAndTax-News.com, New York

14 July 2004

In an interview with the Financial Times this week ahead of a vote on whether to increase regulation of hedge funds, SEC Commissioner Cynthia Glassman revealed that the rift within the US securities regulator between the supporters and critics of increased oversight for the lightly regulated investment vehicles is deepening.

The Commissioner told the FT that she opposed plans to regulate hedge funds more stringently because she believed that the SEC has "not developed a sound economic justification and used our economic resources as well as we could".

"First we need to make sure we know what the problem is. Then we need to figure out the appropriate way to address it, and I'm not convinced we've done that here," she observed in an interview.

Fellow Republican Commissioner, Paul Atkins shares Glassman's objections to the proposals, whilst SEC chairman William Donaldson and Democrat Commissioners Harvey Goldschmid and Roel Campos support increased oversight.

Separately, it emerged that ahead of today's SEC vote, several hedge funds have begun lobbying Congress for assistance in blocking the initiative should it go ahead.

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