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News October 3, 2005 Issue

Atkins Warns on SEC Resources

In a recent speech, SEC Commissioner Paul Atkins predicted that the hedge fund rule would "cause problems" for the SEC.

"The impending February 1 registration deadline for hedge fund advisers comes at a time when the SEC is already experiencing a budget shortage and, more specifically, a shortage of examiners to cover existing registrants," said Atkins. "The new hedge fund adviser registration requirement will divert precious time and attention to the oversight of advisers that manage the money of a relatively tiny number of sophisticated investors fewer than 200,000," he said. In contrast, he added, more than 95 million people have invested through mutual funds and/or retail investment advisers.

"It is basically a question of allocation of scarce and expensive government resources to where it will help the most people who do not necessarily have the resources and political clout to help themselves," he said. Atkins added that he hoped that hedge fund manager registration would give the SEC "greater insights" into the role that hedge funds play in the markets.

Atkins also singled out the fund governance rules, Reg. NMS, and implementation of Section 404 of Sarbanes-Oxley as problematic areas.