WASHINGTON (HedgeWorld.com)–The chairman of the Securities and Exchange Commission testified before a committee of the Senate on investor-protection issues as they relate both to mutual funds and hedge funds.
In his address to the banking committee April 8, William H. Donaldson commended its members on the breadth of their oversight hearings since late trading and market-timing abuses came to light last fall.
“Like you,” he said, “I am outraged by the conduct that has come to light in the recent mutual fund scandals. In large part, I believe that the [mutual fund] industry lost sight of certain principles–in particular its responsibility to millions of investors who entrusted their life’s savings in this industry for safekeeping.”
The chairman told the committee that he doesn’t believe the SEC requires new statutory mandates in order to take remedial action. If, as the SEC moves to reform the mutual fund industry, it discovers critical issues that Congress should address with new legislation, it will inform Congress of that discovery but “I do not believe that legislation is necessary at this time.”
Mr. Donaldson spent much of his time addressing what he called his “personal concerns related to hedge funds,” with the caveat that his views on hedge funds are his own and do not reflect the views of the entire SEC.
He had five questions that he believes the SEC must consider about hedge funds:
1.How are hedge fund managers pricing the securities in their portfolios?