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For Immediate Release: June 28, 2006

FRANK ANNOUNCES LEGISLATION TO GIVE FEDERAL REGULATORS AUTHORITY OVER HEDGE FUNDS

Financial Services Ranking Member: If the SEC doesn't have the authority, let's give it to them

Washington, DC- Congressman Barney Frank, the Ranking Democratic Member on the House Financial Services Committee announced today he will be introducing legislation to authorize the registration and monitoring of hedge funds, effectively reversing a recent Court of Appeals decision.  Last week, the D.C. Circuit Court of Appeals overturned the Securities and Exchange Commission (SEC) rule, finding the SEC reinterpretation of exemptions previously relied on by hedge fund advisors to be "arbitrary."  Frank's legislation, which is still being drafted and will be formally introduced tomorrow, will give the SEC clear authority to require registration and monitoring.  Frank also called for hearings in the Financial Services Committee to examine the hedge fund industry and any need for additional oversight and regulation.

"Given the increasing size of hedge funds and the growing role they are playing in the economy, it would be a grave error to allow the court decision denying any authority by the SEC to stand," said Congressman Frank.  "At the very least Congress should give the SEC the power it has sought to require registration, and we should also be looking into whether any further SEC or regulatory authority regarding hedge funds is needed."

Specifically, Frank's bill would provide the SEC with the clear authority to require registration of hedge fund advisors under the Investment Advisors Act, which reverses the decision of the court. The bill would authorize the SEC to interpret the term "client" to require registration of advisors to funds that have more than 15 investors. 

Click here to see a copy of Rep. Frank's hedge fund bill H.R. 5712.

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The Committee oversees all components of the nation's housing and financial services sectors including banking, insurance, real estate, public and assisted housing, and securities. The Committee continually reviews the laws and programs relating to the U.S. Department of Housing and Urban Development, the Federal Reserve Bank, the Federal Deposit Insurance Corporation, Fannie Mae and Freddie Mac, and international development and finance agencies such as the World Bank and the International Monetary Fund. The Committee also ensures enforcement of housing and consumer protection laws such as the U.S. Housing Act, the Truth In Lending Act, the Housing and Community Development Act, the Fair Credit Reporting Act, the Real Estate Settlement Procedures Act, the Community Reinvestment Act, and financial privacy laws.