The Investment Company Institute (ICI) favours the SEC proposal to require hedge funds to register, and giving the SEC, for the first time, the ability to inspect all hedge fund advisers.
ICI General Counsel Elizabeth R. Krentzman stated in a comment letter to the SEC that the “Commission’s proposal is the right approach at the right time.” She says it will provide the nation’s securities regulator with “ready access to reliable, current and complete information about the hedge fund industry to enable it to monitor the activities of participants in this large, important, and growing segment of the securities market.”
The hedge fund industry has grown to nearly $1 trillion and is intertwined with every sector of the capital markets, including mutual funds, notes Krentzman. Registration, she says, “will enable the Commission to proactively address – not reactively respond to – potentially fraudulent activities in the hedge fund arena.”
All of the ICI’s investment adviser members are registered with the Commission – and many also operate hedge funds. Krentzman says that registration is not overly burdensome for them and does not interfere with investment activities. “Far from being draconian, the Commission’s proposal is a measured and appropriate response to address the risks that hedge funds pose to the securities markets and participants in those markets,” she says.