SEC Chairman William Donaldson was grilled by members of the Senate Banking, Housing and Urban Affairs Committee today on the agency's hedge fund registration proposal. "I have questions ... about whether adviser registration is the most effective means to address concerns voiced by the SEC," said committee Chairman Richard C. Shelby, R-Ala.
Mark Anson, CIO of the $165 billion California Public Employees' Retirement System, Sacramento, expressed support for the SEC proposal, noting "some level of regulation is necessary in the hedge fund industry." Calpers has about $877 million invested in hedge funds.
Adam C. Cooper, chairman of the Managed Funds Association, the trade group representing hedge funds, opposed the SEC proposal. "MFA is concerned that the SEC's proposed rules will adversely impact an industry that makes significant contributions to the strength, liquidity and efficiency of capital markets," he told the committee.
Mr. Donaldson was backed by Democratic panel members, including Sen. Paul S. Sarbanes, D-Md., who noted the collapse of Long-Term Capital Management had put the nation's entire financial system in peril.
After the hearing, Mr. Donaldson acknowledged he had not received any support from other members of the Bush administration on this proposal. "This issue has become political," he said, adding the SEC's mission is investor protection, including participants in pension and retirement plans.