Hedge Funds Seek Delay of Vote

The $866-billion hedge fund industry was making a last-ditch attempt to stop the Securities and Exchange Commission from adopting a plan today that would impose new regulations on hedge funds, the private investment partnerships designed for wealthy investors.

Hedge fund lawyers and lobbyists, including John Gaine of the Managed Funds Assn., have told SEC officials that they would be willing to support a compromise measure if the vote is delayed.

“Everything is on the table,” said Gaine, president of the association in Washington, which lobbies for 800 hedge funds. “This was a very good-faith effort on our part to say, ‘Let’s not vote on this thing [today] and let’s sit down around the table and really work on what the issues are.’ ”

A divided SEC in July gave preliminary approval to rules that would for the first time extend the SEC’s regulatory powers to hedge funds. SEC Chairman William H. Donaldson has championed the plan, saying the industry is growing too fast to escape scrutiny.

Critics of the proposal, including House Financial Services Chairman Michael Oxley (R-Ohio) and Federal Reserve Chairman Alan Greenspan, say government regulation of hedge funds may hinder the efficiency of the financial markets.

The SEC proposal would require fund managers with at least 15 U.S. clients and $25 million in assets to register as an investment advisor with the SEC. Advisors must give the agency information such as their names, addresses and how much money they manage.

Donaldson, speaking to reporters last week, dismissed any suggestion of delaying the vote.