Hedge fund managers will face a new restriction when the Security and Exchange Commissions anti-fraud rule goes into effect on September 10, against a backdrop of spectacular failures in the $1.5 trillion industry, Financial News reports.
The five SEC commissioners in July voted unanimously to adopt a new rule clarifying hedge fund fraud. It prohibits advisers to investors in hedge funds as well as pooled investor vehicles from making false or misleading statements to investors or defrauding investors and prospective investors.
The rule seeks to reinforce the authority of the Investment Advisers Act of 1940 governing cases where investors in a pool are defrauded by an adviser, which was undermined by the 2005 decision.