The SEC announced it will not appeal the court decision that nullified its hedge fund registration rule, given the fact that the court gave several reasons for doing so and was unanimous in its decision, SEC Chairman Christopher Cox said.

"Further appeal would be futile and would simply delay and distract from our goal of advancing investor protection," Cox said. Instead, the SEC will promote voluntary registration and encourage those already registered to remain registered, and it may raise the income and asset requirements for those who invest in hedge funds.

The Commission might also enact an "anti-fraud" rule that will enable it to look through a hedge fund to its investors. The SEC's recommendations might come as early as this week, Cox added.

And although the court precluded the SEC from requiring hedge funds with more than $30 million in assets and 15 or more clients to register, submit periodic audits and keep better records, that does not mean they are entirely unregulated, Cox added.

"It is important to point out that hedge funds today remain subject to SEC regulations and enforcement under the anti fraud, civil liability and other provisions of the federal securities laws," he said. "The SEC will continue to vigorously enforce the federal securities laws against hedge funds and hedge fund advisers who violate those laws. Hedge funds are not, should not be, and will not be unregulated."

The SEC rule went into effect in February, and the court invalidated it on June 23. The SEC had until Monday to decide if it wanted to appeal the decision to the Supreme Court.

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