Claris Law Legal Blogging Community

Editor: Debra G. Speyer, Esq.
Profession: Attorney

Category: Interesting News

A U.S. Court of Appeals for the District of Columbia Circuit struck down a Securities and Exchange Commission rule requiring Hedge Fund advisers to register with the Securities and Exchange Commission as investment advisers.
The SEC rule provided for stricter regulations and random inspections of Hedge Funds which are now a $1.1 trillion industry.

The court ruled that the SEC rule was "arbitrary" since it required registration for those with fifteen or more investors and $25 million in assets to register with the SEC as an investment advisers by early 2006 while at the same time exempted Hedge Funds with one hundred or fewer investors from the Investment Company Act regulations.

SEC chairman Christopher Cox responding to the ruling by stating that "The SEC will use the court's decision as a spur to improvement in both our rulemaking process and the effectiveness of our programs to protect investors, maintain fair and orderly markets, and promote capital formation,"

Likely the SEC will place rules in place which will conform to the Courts opinion.