Hedge Funds Potential Threat
SEC's Schapiro Unsure Whether Hedge Funds Pose Threat
Mary Schapiro, the head of the Securities and Exchange Commission, told Congress this week that it is "really not clear" whether hedge funds pose a potential threat to the U.S. economy. This is a different tone than what the regulatory body previously used when discussing stiffening regulation of hedge funds and gives some hope to those looking to avoid changes to how hedge funds are monitored and the compliance fees that such changes would require.
“It’s really not clear” whether the hedge-fund industry presents “systemic risks,” Schapiro said at a House Financial Services subcommittee hearing. “It will be very important” for regulators “to decide where the lines are drawn.”
Legislation approved by Congress last week establishes the Financial Stability Oversight Council, a super-regulator including officials from the SEC, Federal Reserve and Treasury Department that will monitor market participants with potential to roil the economy. The council, which would have authority over hedge funds it deems systemically risky, could direct the Fed to halt lines of business.
The bill overhauling financial-industry regulation also requires hedge-fund managers to register with the SEC, making them subject to disclosure requirements and agency inspections. Source
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