White Said To Favor Quick Action On Hedge Fund Advertising

Apr 29 2013 | 3:15pm ET

The Securities and Exchange Commission's new chairman seems more eager to pass new rules allowing hedge funds to advertise than either of her predecessors.

While the regulator has received more than 200 comment letters about the proposal to end the 80-year-old ban on hedge fund marketing, Mary Jo White does not seem inclined to make major changes to the draft regulation formally introduced in August. Instead, White reportedly hopes to add investor protections to the rule later, Bloomberg News reports.

The rule was mandated by last year's JOBS Act, and the SEC was given until this past July to produce a final rule. But it has failed to do so, and the maneuvers around the rule have provoked controversy and much grumbling from both sides.

Former SEC Chairman Mary Schapiro was reportedly set to push through a narrow rule allowing hedge fund advertising in August. But, according to published reports, she backtracked when criticized by consumer groups, who are concerned that allowing hedge funds to advertise without specifying investor protections would lead to an increase in fraud. That delay infuriated the SEC's two Republican members, as well as Republican lawmakers.

Those Republicans would likely be pleased with White's new plan, but the woman credited with stopping the rule last year, the Consumer Federation of America's Barbara Roper, isn't happy.

"It would be a very bad sign—a cause for grave concern about the substance of the issue and process of how investor protection concerns are addressed," she said.

White isn't likely to have an easier time with her fellow Democrats on the Commission: Luis Aguilar wrote this month that the rule needs to be rewritten and criticized the "aggressive effort to exclude pro-investor initiatives." And Elisse Walter, who served as interim SEC chairman between Schapiro and White, suggested that more work was needed, and that the rule as written would force the SEC to expend more resources to guard against fraud. And an SEC investor advisory committee has pushed for investor protections to be added.

During her confirmation hearing last month, White told senators that "the SEC needs to get the rules right, but it also needs to get them done." The agency has been struggling with a rule-making backlog due both to the JOBS Act and the Dodd-Frank financial regulation reform law. White has reportedly said that rewriting the rule as Aguilar suggests would take too long. Instead, she is said to favor a "concept release" that would seek comment on how to increase protections without creating further obligations for the SEC.


In Depth

Q&A: Neil Azous Talks Global Macro Investing

Nov 24 2014 | 12:41pm ET

Neil Azous is the founder and managing member of Rareview Macro, an advisory firm...

Lifestyle

Sass Program To See Brooklyn College Students Run Hedge Fund

Nov 26 2014 | 7:56am ET

They say you learn by doing, so the students at Brooklyn College will learn to run...

Guest Contributor

Why The Big Money Is Going To Europe

Nov 14 2014 | 6:03am ET

Peer-to-peer lending was invented with the individual investor in mind. But despite...

 

Sponsored Content

    For Hedge Funds, Mastering Data Is Key To Success

    Nov 4 2014 | 9:45am ET

    Data management is important to every business, but for hedge funds, it is critical. FINalternatives recently asked Peter Sanchez, CEO of Northern Trust Hedge Fund Services, how fund managers can deal with the demands of managing data while at the same time remain transparent and abide by operational best practices. Read more…

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

November 2014 Cover

Building a better market

Reg NMS created a huge bifurcation in equity markets and while much of what has followed has been positive, in terms of lower fees and greater liquidity, many traders would like to see the market come...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.