Former Securities and Exchange Commission Interim Chairman Elisse Walter has changed her tune—to a degree—on hedge fund advertising.
A month after citing the large number of comment letters the agency received on a proposal to end the 80-year-old ban and warning that the new rule will force the SEC to expend more energy guarding against fraud, Walter said she supported allowing hedge funds to advertise, as is required by last year's JOBS Act. And, while Walter said she still hoped to see investor protections added to the proposal, she said she was open to addressing those concerns separately, after the new rule is passed.
New SEC Chairman Mary Jo White has made ending the ban one of her top priorities, and faces pressure to expedite the process from both the agency's two Republican commissioners and from Congressional Republicans, who are furious that the SEC failed to act before the July 2012 deadline set by the law. 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.
White reportedly wishes to push through the current rule, which includes no investor protections, without major changes, and to add protections later.
And while Walter now appears to be on board with that strategy, she is not happy about how the rule was written.
"We have a proposal out there, and it's a very shockingly stark proposal, how streamlined it was and how few questions it asked," Walter said after a Financial Industry Regulatory Authority conference yesterday.