Thursday, September 28, 2006

Private Equity Watches Hedge Fund Regulation

When the now defunct SEC "hedge fund rule" was enacted, there was speculation that the Commission would extend the rule requiring the registration of certain hedge fund managers to the private equity and venture capital world. While there is certainly some overlap in these entities, one would have thought that the quashing of the rule would quash the talk.

Apparently not so. Last week there was an article in Investment News which raised the issue again, and now has expanded the story.

The point of the story was that the collapse of Amaranth proved that current regulations work, but the story moved onto the issue of an expansion of the "hedge fund rule" to include venture capital funds and private equity funds.

In my humble opinion, that is a bit of a stretch, since the SEC cannot adequately perform its current function. Taking on registration of the hedge fund industry, and then adding venture capital and private equity will serve to weaken securities law enforcement, by diluting the efforts of an already overburdened Commission.
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