It didn’t take long for Congress to try to prop up the defunct Securities and Exchange Commission’s (SEC) hedge fund registration rule. Less than one week after the U.S. Court of Appeals for the District of Columbia Circuit’s ruling June 23 that the SEC’s registration rule was arbitrary, granting Phillip Goldstein’s petition vacating the rule, Rep. Barney Frank (D-Mass) introduced a bill to amend the Investment Advisors Act of 1940 to authorize the SEC to require hedge fund registration.
Goldstein, principal of hedge fund Opportunity Partners L.P., responded to news that he had won, saying, “We stood up for what we believed and defeated the mighty SEC.”
While the rule required most hedge fund managers to register as investment advisors affective Feb. 1, 2006, it did so by changing the definition of client. By eliminating the so called “no look through provision” the SEC required private funds to count each investor in a fund as a client instead of the fund itself. Goldstein has held all along that only Congress had the authority to interpret legislation.
Jeff Blumberg, partner in the hedge fund group at law firm Gardner Carton & Douglas LLP says it is too early to declare the rule dead though, “as of today nobody has to comply with the rule because the court vacated it.”
Blumberg says it would be difficult for the SEC to salvage this without help from Congress. “They hung all of the rule on their redefinition of the word ‘client’ and the court said you can’t do that.”
CME woos Hedge funds
Tina Lemieux, head of the Chicago Mercantile Exchange’s (CME) equity product team, will lead a new team designed to attract new hedge fund customers.
Lemieux says the CME has made great strides in bringing hedge funds to the exchange by implementing incentive programs allowing funds to qualify for volume discounts and member rates. The new group will provide a single point of contact for managers along with providing product information.
“Our focus is to promote our products, technology and membership options,” Lemieux says.
hot new ctas
Futures is looking for the best new CTAs to profile in our annual feature. If you have managed customer funds for at least one year and have less than $15 million under management, mail your disclosure document and audited track record to Daniel P. Collins, Futures Magazine, 833 W. Jackson Blvd., 7th Floor, Chicago, IL 60607.
E-mail: dcollins@futuresmag.com. Deadline: Friday, August 18, 2006.
