Search This Blog

25 Jan 2007

SEC Reviews New Hedge Fund Rules

The Managed Funds Association, the main lobbying group for hedge funds, has urged regulators to increase the minimum investment for hedge funds as an alternative to tighter oversight. The proposed new rules are now up for review before the SEC.

This proposal would define a new category of accredited investor that would apply to offers and sales of securities issued by hedge funds and other private investment pools. The number of households permitted to invest in hedge funds would be reduced by 88% if the change takes effect, according to SEC economists. Under the proposal, only investors worth $2.5 million or more, about 1.3 percent of U.S. households, would qualify.

The proposal, which is open to a 60-day public comment period, also prohibits using the value of a primary home to meet the requirement. The increased investor standard will only apply to hedge funds and not to private companies that rely on other exemptions of the federal securities laws.

Christopher Cox, the current SEC chairman, said in December that the SEC's proposed rules "do a much better job of assuring that individuals investing in private funds are likely to have the knowledge and the sophistication that's necessary."

No comments: