Debacles, Implosions and Fraud = the SEC

August 30, 2007 |

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Well, times are definitely a changin’.  The SEC continues to monitor the hedge fund industry for fraud and they now have a new rule meant to deal with it.  As the FT reports …

The five SEC commissioners in July voted unanimously to adopt a new rule clarifying hedge fund fraud. It prohibits advisers to investors in hedge funds as well as pooled investor vehicles from making false or misleading statements to investors or defrauding investors and prospective investors.

The rule stems from a 2005 case before the US Court of Appeals brought by Phillip Goldstein, head of Opportunity Partners, a New York-based hedge fund. He successfully overturned the SEC’s registration requirement passed in 2004 by protesting that it would lead to hedge funds being saddled with additional compliance costs.

At the time, the SEC argued that the rapid growth of hedge funds in recent years combined with the rising interest of retail investors and a growing number of fraud cases in the industry justified the registration requirement.

HFL says: The SEC needs to find Jimmy Hoffa and bring him back from the dead.  Instead of trickling out little rules here and there over time, Jimmy would simply impose the regulations all at once (we all know its coming anyway).

Another hedge fund bites the dust: Basis Capital is now dead and ready for burial.  Another victim of the subprime situation. 

HFL says: Check out hf-implode.com.  They have a nice run through of the Basis situation.

Don’t worry your little head about the subprime situation because Sen. Chuck Schumer is on top of things — see the letter from Bernanke to Schumer here.
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