WASHINGTON Oct 18 The head of the U.S.
Securities and Exchange Commission vowed to plow ahead with
controversial new rules requiring hedge funds to disclose
details about private stock deals before advertising them, a
move that is likely to irk the industry.
"For investors' sake and the sake of the new marketplace, we
need to move expeditiously toward adoption," SEC Chair Mary Jo
White told the Managed Funds Association in a speech in New York
The plan aims to help the SEC get more information about the
private securities market by requiring numerous additional
It was proposed in July in an effort to appease critics who
had urged the SEC to delay adopting a related rule that lifted
an 80-year-old ban on general advertising for private stock
deals by hedge funds and other firms.
The lifting of the advertising ban was required by the 2012
Jumpstart Our Business Startups (JOBS) law that eases securities
regulations to help small businesses raise capital and go
Investor groups had urged the SEC to include more customer
protections before lifting the ban.
Instead, White opted to press ahead with adoption of the
advertising rules and separately propose a set of additional
disclosures for private securities offerings in an effort to
help the SEC better protect investors.
The new advertising rule went into effect in late September.
The proposal championed by investor advocates has generated
more than 450 comment letters so far, White told the audience on
"This is an important proposal, and there are a lot of
different views about it, so it is important to have an
opportunity to consider these views," she said.
Many of the comments have been negative, with critics
including New Jersey Republican Congressman Scott Garrett saying
the additional disclosures will "increase regulatory burdens on
small businesses" and essentially undermine the whole purpose of
the JOBS Act.
In another sign that White is not willing to ease
restrictions for private funds, she also said she would not give
in to pressure by some to allow private funds to avoid
inspections by SEC examiners.
Last month, Garrett and House Financial Services Committee
Chair Jeb Hensarling wrote a letter to White urging the SEC to
stop spending so much time conducting compliance exams of hedge
fund and private equity fund advisers.
The lawmakers argued that investors in these funds are more
sophisticated, and that the SEC's time would be better spent
examining advisers who offer mom and pop investors advice.
Without naming the lawmakers in her speech, White rejected
that argument on Friday.
"The SEC has a mission of investor protection that runs
across the investor landscape. It applies to all investors, and
all investors in the U.S. markets deserve to know that there is
a regulator on the block," she said.