A divisive rule that would apply stronger government oversight over hedge funds is to be put into effect by the new chairman of the SEC Christopher Cox, according to The Wall Street Journal.
Cox said that he wouldn't make any radical shifts in his first few months, but that he wanted to emphasize the SEC's function as a supervisory body.
"It's important always to monitor the effectiveness of regulation," Cox said. "If a particular approach is working well and is cost-effective, we should use it as a model. If another approach is unduly expensive and produces little in the way of worthwhile results, we should amend our approach."
Cox seems to be playing to both crowds. He doesn't want to draw the ire of big business and the White House but still keep the SEC pure in its duty as watchdog.

In addition, Cox may need to deal with the issue of the SEC's recent tend to use big fines as the punishment for corporate wrongdoers. The argument has been going on for a while, that with these types of punishments, the fines are negatively impacting shareholders.

Also, many have argued that the SEC is inconsistent with fining corporations, especially when deciding on how much to fine.

Cox hinted that he might come up with some kind of regulations when it comes to these corporate fines, in an effort to apply some consistency in the process. "I am hopeful that the commission can adopt a framework for the imposition of penalties so that we can, with a degree of predictability, use all of the tools in our arsenal to meet the objectives of both punishment and deterrence," he said.

Cox noted that executive compensation is one area in which the SEC must take action, making it clear that pay packages should be disclosed and explained to investors, who may not fully comprehend just how much managers are paid beyond their salary.

The SEC is on the move to really impact the business world. Cox is in the position to appoint a chief accountant, director of investment management and a director of market regulation. Cox said that filling these positions is No. 1 on his agenda.

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

 

 

 

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.