The Securities and Exchange Commission is still wrestling with a proposed rule that will allow hedge funds to advertise, one of its members said yesterday.
Elisse Walter, who served as interim chairman of the regulator prior to Mary Jo White's confirmation this month, told a House Financial Services subcommittee that the SEC is working on how to balance an end to the 80-year-old hedge fund advertising ban, mandated by last year's JOBS Act, while preventing a spike in fraud. The agency is sifting through letters it received during the comment period for the regulation, which was provisionally introduced in August.
"I believe that the over 200 comment letters that were quite substantive and interesting to me and my colleagues that we did receive showed" that the SEC's corporate finance division was wrong to say that no new information could be gained through public comments.
Walter also warned that the new rule will force the agency to expend more energy guarding against fraud.
"We would have to expand examination and enforcement resources that we would not otherwise have to," she said.