Guerrilla opposition to the SEC rules will continue, but a new era is dawning
News that the Securities and Exchange Commission had decided to regulate was greeted with howls of protest and claims that it would would stifle innovation and hurt investor choice. Many iconoclastic commentors forecast the end of the industry.
That was 70 years ago, when SEC first moved to regulate the mutual fund industry. Today, many of the same arguments are being used by those opposed to the decision in late-October by the SEC commission to regulate hedge funds.
History shows that registration did not sound the death-knell for the mutual fund industry as the critics suggested. In fact, following the last mutual fund Act in 1940, the industry exploded from a $448 million business to the $7 trillion industry today. Far from stifling innovation, the new rules sparked a explosion of creativity and choice, which some...