U.S. Securities and Exchange Commission Chairman Mary Schapiro wants authority to regulate what hedge funds can buy and how much money they can borrow to maximize bets, saying registration falls short of what’s needed to police the $1.33 trillion industry.
“It’s probably not enough just to register hedge funds” with the SEC, Schapiro said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend. “It may well be necessary to put in place particular kinds of rules.”
Recommended Stories
Treasury Secretary Timothy Geithner’s plan to overhaul financial oversight in response to the worst economic crisis since the Great Depression would force hedge funds to register with the SEC, subjecting firms to new disclosure requirements and inspections by agency staff. Schapiro said the SEC’s authority should be broader, so it can impose further restrictions on funds as “situations evolve.”
President Barack Obama yesterday blamed hedge funds that had lent Chrysler LLC money for triggering the automaker’s bankruptcy. Obama said the funds were “speculators” that refused the administration’s buyout offers because they were holding out for an “unjustified taxpayer bailout.”
Schapiro said “it’s certainly possible” that the SEC would consider forcing hedge funds to publicly disclose short- sale positions, imposing restrictions on leverage and restricting what the firms can invest in.
“Were not at the point where we’ve made decisions about those things,” she said, adding that the SEC would first consult with other government agencies.
The U.S. Senate this week voted to give the SEC $20 million in additional funding next year to hire 60 investigators after Schapiro said the agency lacked resources and it drew criticism for missing Bernard Madoff’s Ponzi scheme. Schapiro said the money is an “enormous help” and that the agency “could use lots more” additional funding.
Schapiro, who has replaced senior SEC staff since taking over in January, said she is still considering candidates to fill the agency’s chief accountant position. One candidate under consideration was Charles Niemeier, a member of the Public Company Accounting Oversight Board who drew criticism for supporting rules opposed by banks and business lobbyists.
“I’m very committed to finding a chief accountant who is pro-investor” and “understands that financial statements are written for investors so they can make rational decisions about how to allocate capital,” Schapiro said.
