Big news out of Washington, DC. The rule mandating registration by hedge funds was overruled today on appeal and sent back to the SEC for a 'reworking'. So now registration of funds is not required? The panel that originally voted for this required registration was quite divided on it and the final vote was 3-2. The dissenters and opponents have been very loud in their disagreement ever since the rule came into affect. The court obviously took their position and ruled to overturn the rule requiring registration.
To quote Reuters:
SEC Chairman Christopher Cox said that his team will reevaluate their approach to the hedge fund industry after the US Court of Appeals for D.C. smacked down their rule requiring registration as "arbitrary".
"The SEC will use the court's decision as a spur to improvement in both our rule-making process and the effectiveness of our programs to protect investors, maintain fair and orderly markets, and promote capital formation."
How will this affect smaller funds that are governed by state entities and/or funds with less than 15 investors? Here's a blanket statement to cover that question too:
"Hedge funds do not need to register under the Investment Advisors Act of 1940, a US Court of Appeals in Washington, D.C. said today. The court found that the SEC rules requiring hedge funds with more than 15 investors to register were arbitrary and struck down the rule.
The US Court of Appeals for the DC Circuit is considered one of the most important and prestigious appeals courts in the US. It rarely spanks the SEC so hard, so this case is definitely a big deal."
Happy weekend.
DJIA 10,989.09
NASDAQ 2,121.47
SP500 1,244.50