SEC Sets Dates for Hedge Fund Round Table

WASHINGTON ( Securities and Exchange Commission will host round table discussions on a wide range of issues related to hedge funds, on May 14 and 15 in the William O. Douglas Room at SEC headquarters.

The SEC is looking especially for insight on the following topics: the structure, operation and compliance activities of hedge funds; marketing issues; investor protection issues; the current regulatory scheme; and whether additional regulation is warranted. Hearings on these matters have been in the offing for some time. They were expected in November 2002 but were postponed due to the resignation of then-chairman Harvey Pitt.

"From the earliest days [of the investigation], there were going to be round tables," said the head of the Managed Funds Association, John Gaine. "First it was going to be August, then, September, then November. When Mr. Pitt resigned, we heard that the staff had to wait to find out when the new chairman wanted to do it. So now again we have a date. This isn't news." He also said that he expects "two full days, nine-to-five, with a lot to discuss."

Leon Metzger, a member of the investor risk committee of the International Association of Financial Engineers, New York, said that the IAFE has not yet convened to form an opinion on the upcoming round table. Speaking strictly for himself, Mr. Metzger added that the announcement is "a positive development, and I applaud the commission for its efforts. I'm sure that the industry will benefit from the round table and all the diligent work done by the talented staff of the commission."

When asked specifically about the issue of the valuation of hedge funds, Mr. Metzger said that that is a complex topic. "Clearly one size does not fit all."

Related Developments

The announcement of the round table dates came just a day after the U.K.'s Financial Services Authority issued a new statement of its stance on hedge fund issues. The FSA had considered a liberalization of marketing rules for hedge funds in the United Kingdom but has now decided that there is no demand for such a move.

Mr. Gaine said that few of the members of the MFA are likely to be disappointed by the FSA stance, although "I think that there are some of the traditional mainstream investment company managers who were looking for liberalization so they might be disappointed."

The MFA's London counterpart, the Alternative Investment Management Association, has also kept an upbeat tone in its reaction to the FSA announcement. A representative there said that the AIMA recognizes the need to continue to educate independent financial advisers in the nature of the available products and that "AIMA looks forward to continue working with the FSA to consider ways which would allow fund of hedge fund products to be brought into the regime for retail investors."

The SEC's announcement of dates for the round table also came only two days after Chairman William Donaldson dropped some hints about his own thinking after a speech at the convention of the National Association of Business Economics. Mr. Gaine said that he had heard reports on those comments and that Mr. Donaldson seems especially concerned about retailization and marketing. These are matters he said that the MFA and its members are ready to address.

On March 20, the SEC announced a new short-swing reporting system web site exclusively for the creation and submission of test filings of forms three, four and five pertaining to Securities Exchange Act of 1934 sect.16(a) ownership reports.

"We have designed the web site to make it easier for individuals to satisfy the electronic filing obligations that will apply to them when electronic submission of these Forms is mandated later this year," the SEC said in a statement.

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