Now that you’ve seen what ACA Insight has to offer, don’t be without it. Subscribe now!

The weekly news source for investment management legal and compliance professionals

Current subscribers - please log in to the website in the upper right-hand corner

News January 2, 2006 Issue

SEC Registration = Red Tape?

Why doesn’t Phillip Goldstein want to register as an adviser with the SEC?

The hedge fund manager, who is suing the SEC over its hedge fund rule, was asked that very question during a December 15 appearance on MSNBC’s Power Lunch program. Connecticut Attorney General Richard Blumenthal, also appearing on the program, had just stated that SEC registration involves a "very, very minimal cost" for hedge fund managers. "I mean we’re talking a fraction, a minimal amount of money that is required," said Blumenthal.

With that, the show’s host turned and asked Goldstein: "Why not just register with the SEC? What harm would that do to your business?"

"What it would do is tie me up in red tape and dealing with lawyers when my real job is to be out there making money," Goldstein replied. "Regulation and registration is not as innocuous as the Attorney General says. And if you talk to investment advisers who are registered and ask them what they had to go through on an inspection when they hadn’t done anything wrong — your business can be tied up for two or three weeks with a lot of inane questions by people who don’t understand what you are doing. And that’s costing your investors money, because you should be focusing on making money."

Earlier in the segment, Blumenthal said that the members of his hedge fund task force should be announced "shortly." The group will include hedge fund managers, hedge fund investors, academics, and government officials. The goal of the task force, he said, would be to "try to devise a more sensible and reasonable way to protect" hedge fund investors, by establishing "commonsense" and "very limited" rules to provide more transparency.