CONTACTS: Linda Rozett/Eric Wohlschlegel
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Tuesday, October 26, 2004
U.S. Chamber Says SEC Failed to Heed Advice
Hedge Fund Rules Rushed Into Regulatory Policy
WASHINGTON, D.C. - The United States Chamber of Commerce charged the Securities and Exchange Commission (SEC) rushed its rules governing hedge fund disclosure into effect, without adequately considering alternative proposals or the nearly unanimous view that the proposal was misguided.
“This rush to regulate could have significant negative implications for the strength of the capital markets and our overall economic health, without adding any new benefit or protection for investors,” said David Hirschmann, Chamber senior vice president.
There are significant dangers to regulating an entire industry simply because of its size or the potential for a problem, according to comments the Chamber filed with the SEC last month.
While the SEC argued it needed more information on hedge fund operations, the agency failed to consider less onerous means of gathering that background material, including obtaining access to information already made available by hedge funds to other government agencies such as the Treasury or Federal Reserve. Additionally, the SEC failed to comprehensively consider the costs and consequences the proposed rule would have on U.S. capital markets if implemented.
“The SEC has overreached its authority and crafted a rule for a problem that does not exist,” said Hirschmann. “We share the Commission’s goal of protecting investors’ interests and detecting fraud, but layering on unnecessary regulations is not the answer.”
The SEC’s decision on hedge fund disclosure comes on the heels of a D.C. Circuit Court decision granting the Chamber's motion for expedited review of another Commission proposal that would require mutual fund boards of directors to have an independent chairperson and that 75 percent of the directors be independent as well.
The United States Chamber of Commerce is the world's largest business federation, representing more than three million businesses of every size, sector and region.
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