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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony, -- Ignore unavailable to you. Want to Upgrade?

To: Jeffrey S. Mitchell who wrote (94568)	6/23/2006 8:36:26 PM
From: Done, gone.	Respond to of 122087

The court decision raises questions about how aggressively the SEC will seek to regulate the industry. LOL. Very funny. ROFLMAO kind of funny. The decision was cheered by hedge fund managers. Quelle surprise.

To: Jeffrey S. Mitchell who wrote (94568)	6/23/2006 8:36:59 PM
From: Done, gone.	Respond to of 122087

delete -- duplicate

To: Jeffrey S. Mitchell who wrote (94568)	6/23/2006 8:53:22 PM
From: Done, gone.	Respond to of 122087

Ruling Sets Back Effort to Regulate Hedge Funds By JEREMY W. PETERS and FLOYD NORRIS Published: June 23, 2006 A federal appeals court today set back efforts to regulate hedge funds, the highly secretive investment pools for wealthy and institutional investors, by striking down a Securities and Exchange Commission rule that tightened government oversight of the funds. Under the rule, the funds would have been required to register with the commission and would have been subject to inspections. But an opinion by Judge A. Raymond Randolph of the United States Court of Appeals for the District of Columbia called the rule "arbitrary" and told the commission to reconsider. Because of the vast amounts of money at their disposal, hedge funds can quickly move markets for stocks, bonds and commodities with just a few trades. In times of sharp market fluctuations, their activities are often given the blame. By some estimates, 10 to 20 percent of all stock trading in the United States involves hedge funds. Universities use them to expand their endowments, and corporations invest pension funds in them, making hedge funds a considerable force in American economy. As hedge funds have grown, and as some have collapsed because of fraud or excessively risky investments, pressures to regulate them have grown. But fund managers have protested that the vast majority of the funds have acted responsibly and should not be subjected to what James McCarroll, a lawyer with Reed Smith, a New York law firm, said today were "the regulatory overlays and burdens" faced by mutual funds. The ruling does not leave hedge funds totally above the law. They are treated like any other investor when it comes to conduct. As a result, the appeals court decision does not affect the commission's investigation into possible insider trading by a major hedge fund manager, Pequot Capital Management, which was disclosed in The New York Times today. Christopher Cox, who became chairman of the commission after the rule was adopted, said in a statement: "The S.E.C. takes seriously its responsibility to make rules in accordance with our governing laws. The court's finding, that despite the commission's investor protection objective its rule is arbitrary and in violation of law, requires that going forward we re-evaluate the agency's approach to hedge fund activity." He said the commission would "use the court's decision as a spur to improvement in both our rulemaking process and the effectiveness of our programs to protect investors, maintain fair and orderly markets, and promote capital formation."After the 1998 near-collapse of Long-Term Capital Management, a hedge fund so large that it threatened to send many of the nation's largest financial institutions into disarray if it failed, the commission attempted to impose some controls on the funds. It issued new regulations for them in late 2004, and required them to comply by Feb. 1, 2006. Phillip Goldstein, a hedge fund adviser from Pleasantville, N.Y., sued the commission to block the new rules, along with Opportunity Partners, a hedge-fund partnership, and its general partner, Kimball & Winthrop. They had argued that the commission had exceeded its authority, and that only Congress had the power to make the changes in regulation that the commission tried to impose. To justify its new rules, the commission changed its interpretation of the word "client" in an investment law dating from 1940, which exempts from regulation any fund adviser with fewer than 15 clients. In the past, a hedge fund was treated as a single client for this purpose; the new interpretation counted each investor in the fund as a separate client, a change that would bring more than 1,000 hedge fund advisers under the law's scrutiny for the first time. A three-judge panel, led by Judge Randolph, ruled unanimously today that the commission exceeded its authority by treating investors in a hedge fund as "clients" of the fund manager. Unless overturned on further appeal, the ruling would deny the commission any authority over hedge funds unless Congress acts to revise the law. Any effort at congressional action would be strongly opposed by many funds. nytimes.com