Summit News

Congress to give SEC hedge fund authority: Frank

WASHINGTON (Reuters) - Congress will give the U.S. Securities and Exchange Commission the authority it needs to require hedge funds to register with the agency, the Democratic head of the U.S. House Financial Services Committee said on Tuesday.

“We will give them (SEC) explicitly that authority” to register hedge funds, Chairman Barney Frank told the Reuters Global Financial Regulation Summit in Washington.

In 2006, a federal court rejected the SEC’s efforts to oversee the loosely regulated $1.3 trillion hedge fund industry. Since then, the SEC has attempted to work around the court ruling and adopted a rule prohibiting hedge fund advisers from defrauding those who invest or intend to invest in the funds.

But the current financial crisis has led many policymakers to believe that hedge funds need to be overseen by federal regulators.

U.S. Treasury Secretary Timothy Geithner has recommended that all advisers to larger hedge funds, private equity funds and venture capital funds register with the SEC. He also proposed the funds disclose their counterparties and information needed to assess whether a fund is so large or highly leveraged that it poses a threat to financial stability.

SEC Chairman Mary Schapiro recently said the agency is looking at regulating hedge funds.

Already pending in the U.S. Senate is a bill that would give the SEC the authority over hedge funds the agency had sought before the court ruling. However, both the House and Senate must pass the same legislation to send it to the president to sign into law.

Frank said the hedge fund registration requirement would be included in his package of legislation to reform U.S. financial regulation, which he wants approved before the end of this year.

(For summit blog:

Reporting by Rachelle Younglai; Editing by Tim Dobbyn and Matthew Lewis