Don't forget state regulators

Tue Nov 1, 2005

Starting February 1, the Securities and Exchange Commission will have its hands full in its brand new role as hedge fund overseer under Rule 203(b)(3)-2 of the Investment Advisers Act of 1940. Despite all the focus on the SEC, don't forget about another set of regulators: state securities commissioners. While state regulators are much lower profile than the SEC, they have a critically important role to play in regulating hedge funds and protecting investors.

The securities industry has long complained about state regulation, saying that it is a quagmire of more than 50 different conflicting laws. It would be so much easier to have just the SEC oversee financial firms, the argument goes.

However, many states are in a better position to know the local lay of the land than the D.C.-based SEC. The state financial regulators, either the securities or banking departments, may raise the...

ISSN: 2151-1845 / CDC10004H


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