Last week a federal appeals told the SEC that it lacked authority to under the Investment Advisors Act of 1940 to require the registration of hedge fund managers. Many thought the SEC would try to craft a new rule on hedge funds, better tailored to fit the law. Congressional Democrats think they have a better idea—let’s just make a new law!
Top U.S. House of Representatives Democrats said on Wednesday they plan to introduce legislation to revive a government effort to regulate hedge funds that was blocked last week by a court.
Massachusetts Rep. Barney Frank said he will unveil a bill on Thursday to give the Securities and Exchange Commission "clear authority to require registration and monitoring" of hedge fund advisers.
This is probably a really good idea. No, really. A hastily thrown together, partisan bill is exactly the right way to regulate the hedge fund industry!
US House Democrats drafting hedge fund legislation