SEC Mulls Hedge Fund Sign-Up Extension
Breathe easier, everyone -- the tradition of movable deadlines for compliance measures is alive and well. The SEC is mulling extending the deadline for some hedge fund that had to register on July 21, 2011 to next year.
Hear that sound? Hundreds of hedge fund managers are exhaling and most likely hoping for yet another extension.
In an April 12 letter from Robert Plaze, The SEC's associate director of the Division of Investment Management, wrote:
"We anticipate that the Commission will complete its implementing rulemaking by July 21,2011 in accordance with the Dodd-Frank Act, but expect in connection therewith that the Commission will consider providing additional time for investment advisers affected by these provisions to come into compliance."
In the letter, Plaze estimates that "Firms that fall within the $25 to $100 million range will then have a grace period to switch their registrations to all the states in which they operate. One proposed grace period is 60 days, but it may be longer. As has always been understood, firms operating in more than 14 states can maintain their registration with the SEC."
Why the extension? In a short Q&A with CNBC, Tom Westle, partner at Blank Rome, who represents hedge funds, doubts that the SEC has the bandwidth, funds and expertise to audit hedge funds once those Dodd-Frank Act rules are in place.
Westle says, "The staff of the SEC that is charged with the examination process has a learning curve to deal with before they are fully prepared to examine the hedge fund industry. Even taking into consideration the reduction of the number of advisers that will have to register with the SEC because of the $150 million threshold, I think that the sheer number of newly registered advisers will cause issues for timely examinations by the SEC staff."
Stay tuned for updates. Phil Albinus is the former editor-in-chief of Advanced Trading. He has nearly two decades of journalism experience and has been covering financial technology and regulation for nine years. Before joining Advanced Trading, he served as editor of Waters, a monthly trade journal ... View Full Bio