The Securities and Exchange Commission has again delayed implementing a new rule that will end an 80-year-old ban on hedge fund advertising, while promising to finalize the changes as soon as the fall.
SEC Chairman Mary Schapiro said the new rule would not take effect on Wednesday, as she originally intended. Under that plan, the rule would be in effect during its mandatory comment period, which usually precedes the final adoption of a rule. Schapiro said she feared such a route would lead to legal challenges to the new regulation.
The SEC has already delayed adoption of the new rule once. The JOBS Act, passed in April, mandated that the regulator adopt the rule within 90 days, setting a July deadline. The agency said in June that it would miss that deadline.
The new rule will not only allow hedge funds to advertise to the general public for the first time, but will also require that they take reasonable steps to ensure that investors are accredited. Hedge funds will still be available only to wealthy investors.
Schapiro said Thursday that the rules could be in place as soon as the fall, but Congressional Republicans were not happy with the delay. Rep. Patrick McHenry (R-N.C.), who heads an SEC oversight subcommittee, promised to hold hearings on the matter next month.
"By kicking the can down the road, you are abdicating your responsibility to follow the law, failing to fulfill your sworn commitment to this subcommittee, and ignoring the will of Congress and the president," McHenry wrote to Schapiro.