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August 08, 2006 at 08:00 PM
SEC Commissioner Christopher Cox said August 7 that the SEC will not appeal the D.C. Circuit Court of Appeals’ decision in Goldstein v. SEC, which struck down the SEC’s hedge fund manager registration rule.
Cox said the Commission’s Solicitor and General Counsel “have concluded that, since the appellate court’s decision was based on multiple grounds and was unanimous, further appeal would be futile and would simply delay and distract from our goal of advancing investor protection.”
Instead, Cox said, the SEC is moving aggressively on an agenda of rulemaking and staff guidance–some of which may be issued as early as this week–to address the legal consequences from the invalidation of the rule.”
Among the significant new proposals, he said, will be a new anti-fraud rule under the Investment Advisers Act that would have the effect of ‘looking through’ a hedge fund to its investors. This would reverse the side-effect of the Goldstein decision that the anti-fraud provisions of the Act apply only to ‘clients’ as the court interpreted that term, and not to investors in the hedge fund.
