SEC Chief: Hedge Funds’ Systemic Threat ‘Not Clear’

Jul 21 2010 | 12:00pm ET

The head of the Securities and Exchange Commission said she is unsure if any hedge funds present “systemic risks” to the global economy.

Speaking to a House Financial Services subcommittee yesterday, Chairman Mary Schapiro said “it’s really not clear” what risk, if any, the hedge fund industry presents. But, she added “it will be very important to decide where the lines are drawn.”

It will also be important, Schapiro said, for the SEC to beef up its staff to allow the regulator to actually examine all of the hedge funds that are about to come under its purview. The financial regulation overhaul bill—due to be signed by President Obama today—requires hedge funds and private equity funds with $150 million or more in assets to register with the SEC.

That bill will also create the Financial Stability Oversight Council, a new body including officials from the SEC, Federal Reserve and Treasury Dept. that has authority over firms deemed systemically relevant.

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