SEC Claims Power To Enforce Hedge Fund Fraud

Law360, New York (July 12, 2007, 12:00 AM EDT) -- The U.S. Securities and Exchange Commission has asserted its ability to enforce anti-fraud regulations in the $1.2 trillion hedge fund industry after a federal appellate decision a year ago called that ability into question.

The SEC's new rule, which it announced Wednesday, clarified that it has the authority under the Investment Advisers Act of 1985 to file lawsuits against hedge-fund managers for alleged securities fraud, such as the making of false or misleading statements to investors.

"The rule will give the Commission an important tool to...
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