A new securities rule requiring hedge fund advisers to register with the SEC could make these private investment pools more accessible to investors, not less, SEC Commissioner Cynthia A. Glassman said today in a speech before the Public Funds Boards Forum in San Francisco. "Specifically, because pension funds tend to limit hedge fund investments to those with registered advisers, the mandatory registration of all advisers will expand the potential universe and thereby afford even more opportunities for investment in hedge funds," she said. She added that another unintended consequence of the rule could be to create less liquidity in the market because hedge funds might require investors to lock up their money for at least two years to avoid registration under the rule, which defines hedge funds as pools that allow investors to redeem their money in less than two years.
"Although a commission task force has been constituted to identify hedge fund risks, it should have completed its work prior to the promulgation of this rule, so that the rule could be specifically tailored to address actual, as opposed to hypothetical, concerns," Ms. Glassman added.
Ms. Glassman and Commissioner Paul Atkins voted against the rule.