Top SEC Regulator Backs Hedge Fund Oversight

A top U.S. securities regulator said Tuesday she generally supported requiring hedge funds to register with the Securities and Exchange Commission.

SEC Commissioner Elisse Walter is the latest in a growing number of policymakers to express support for more oversight for the $1.4 trillion industry. "I generally do support that notion (of hedge fund registration)," the Democratic commissioner told Reuters in an interview. "But the devil is in the details. Registration has to be meaningful."

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Treasury Secretary Timothy Geithner and SEC Chairman Mary Schapiro have said they support a registration requirement for the loosely regulated pools of capital.

Another SEC commissioner, Luis Aguilar, has said Congress should ensure the SEC has the jurisdiction to regulate hedge fund advisers.

Senators Charles Grassley, an Iowa Republican, and Carl Levin, a Michigan Democrat, recently introduced legislation to give the SEC authority to require hedge funds to register. The bill would require hedge funds to maintain books and records that the SEC may require and cooperate with any request by the SEC for information and exams.

Walter, previously a senior executive at the Financial Industry Regulatory Authority, a broker-dealer watchdog, said the regulatory system for broker-dealers and investment advisors was outdated.

"We have a regulatory system that has been outgrown by the marketplace," Walter said. "The burden of understanding the differences in regulation falls in exactly the wrong place, namely on the shoulders of retail investors."

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