Congratulations, Commissioner

The SEC, after much saber-rattling, decided not to try and appeal the court ruling invalidating the hedge fund registration rule. It is nice to see that cooler heads prevailed. As noted in today’s Wall Street Journal, Commissioner Cox raised two very important areas where a measure of SEC regulation would be both welcome and appropriate:

Mr. Cox said the SEC will propose an antifraud rule that would deem hedge-fund investors to be clients, reversing a side effect of the court’s decision that regulators worried might undercut investor protections, and will consider increasing minimum asset and income requirements for hedge-fund investors.

Commissioner Cox also went on to note a point I have made in previous posts, that the SEC has both the jurisdiction and responsibility to enforce federal securities laws regardless of whether or not a hedge fund is registered:

Mr. Cox said SEC staffers plan to issue other guidance that will help hedge-fund advisers who are already registered with the SEC to stay registered. He noted the agency will continue to enforce federal securities laws when it finds wrongdoing.

This is the right answer, Commissioner. I am happy that you were able to rise above the uneducated and irresponsible banter and focus on the areas where the SEC can truly add value, and not to add unnecessary costs and bureaucracy in order to placate noisy politicians.