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News September 19, 2005 Issue

SEC Staff Working on Hedge Fund Guidance

The SEC staff is planning to respond to the American Bar Association’s June 23 letter asking for guidance in implementing the hedge fund registration requirement.

It’s just taking longer than expected.

At last week’s SIA hedge fund conference, SIA general counsel Ira Hammerman asked Schulte Roth partner Paul Roth, who signed the letter, what the status of the staff’s response was.

"Wish I knew," said Roth. "We are awaiting a response."

Roth obligatorily went on to add that he knew that the staff was working "diligently" to put together "as fulsome a response as possible." The staff, he said, appreciates the need to get the guidance out quickly, in light of the approaching deadline for hedge fund manager registration.

So what’s going on?

SEC associate director Robert Plaze confirmed that the Division of Investment Management staff is working on a response. "It’s an important letter," he said. However, he noted, the ABA’s request "raises a large number of issues," so a response "is going to take some time." Plaze declined to predict when the staff’s response would see the light of day. "We have a number of people working on it," he said, including staff from the Office of Investment Adviser Regulation and well as the Office of the Chief Counsel.

Couldn’t the staff split the response up by issuing the "easy" answers first, and then issuing a second response later on?

"Yes," said Plaze. "It’s very likely that all the questions will not be answered" initially, and that answers to other questions will be "postponed, just because they raise issues that we are not prepared to answer at this time."