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SEC votes to oversee hedge-fund advisors: Seeks comment on IPO reforms

Date: Tuesday, October 26, 2004

By James Langton: The Securities and Exchange Commission voted today to require hedge fund large hedge-fund operators to register with the federal agency and undergo routine inspections. The new rule will take effect in February 2006. The SEC says funds with less than $25 million under management would generally be exempt. Meanwhile, the SEC voted unanimously to seek comment on the idea of reforming the rules concerning initial public offerings. The amendments would largely eliminate the “quiet period” ahead of a new offering for large firms. The regulator says that the rules would allow TV ads and media interviews with executives that would permit them to tout their offerings. However, firms will also face civil liability for these statements. The Securities Industry Association issued a statement welcoming the decision. “A more efficient process of capital-raising will provide businesses with improved access to capital, allowing them to expand and add more jobs,” said Ira Hammerman, SIA senior vice president and general counsel. “While the current system has worked well, the SEC recognizes that the markets today have changed dramatically since 1933, when the laws governing the offering process were first established. Many of the current provisions need to be updated.”