WASHINGTON (HedgeWorld.com)–Paul Roye plans to leave the U.S. Securities and Exchange Commission and take a job in the private sector.
Mr. Roye, who has headed the SEC’s Division of Investment Management since 1998, did not say when he would leave the commission. A spokesman for the SEC said he did not know who would replace Mr. Roye or over what time frame the transition would occur.
It was not known where Mr. Roye planned to go next, although there has been speculation in the legal community that he would likely take a job at a private firm that specializes in securities law. Mr. Roye previously worked at Dechert LLP from 1982 until he became director of the Division of Investment Management. He has a law degree from the University of Michigan Law School.
“It has been an honor and a privilege to serve America’s investors as director of the Division of Investment Management,” Mr. Roye said in a statement. “I will miss my talented and dedicated colleagues in the Division of Investment Management as well as others throughout the Commission who, particularly during the challenges of recent months, have given their all to serve and protect America’s investors.”
Mr. Roye is well known in the hedge fund community as an architect and key backer of new rules extending the SEC’s oversight of hedge funds.
Steven J. Tsimbinos, a partner at the law firm Lowenstein Sandler PC, Roseland, N.J., said he suspected that Mr. Roye’s departure will not have a significant impact on the commission’s regulatory stance in regard to hedge funds, because the move to require registration of hedge fund managers “was [SEC Chairman William H.] Donaldson’s initiative.” Mr. Tsimbinos said he had viewed Mr. Roye as being “sort of on the regulation side” and “in the same camp” as Mr. Donaldson. “He was an effective regulator,” Mr. Tsimbinos said, adding that he had not heard where Mr. Roye might be heading, though he speculated it might be to a Washington, D.C., law firm.
Just last week, Mr. Roye spoke at a Managed Funds Association seminar on hedge fund regulation.
Mr. Donaldson said Mr. Roye mentioned to him almost a year ago that he intended to leave the commission. Mr. Donaldson said he asked Mr. Roye to stay on to help finish work that had begun on reforming the SEC’s regulation of the mutual fund industry.
“Paul, a consummate professional with a deep sense of commitment to serving America’s investors, agreed to stay and provided invaluable guidance and input as we developed a strengthened mutual fund regulatory regime,” Mr. Donaldson said in a statement. “Paul has served as head of the Division of Investment Management at a critical time in the history of the investment management industry. He will leave a strong and lasting legacy.”
He also will leave behind some unfinished legal business. Lawsuits have been filed challenging both the SEC’s mutual fund reforms and its new hedge fund rules (see Previous HedgeWorld Story).
The SEC was criticized for moving too slowly in confronting the mutual fund market-timing and late-trading scandal, which was uncovered in late 2003 by New York State Attorney General Eliot Spitzer. Since then, more than a dozen mutual fund firms have settled market-timing and late-trading charges brought by Mr. Spitzer’s office and by the SEC. According to a release from the New York State Attorney General’s office, the settlements have so far generated US$1.17 billion in restitution, US$821 million in civil penalties and US$925 million in negotiated mutual fund management fee reductions, for a total settlement value of close to US$3 billion.
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