New hedge fund rule would be a false economy
In large gold letters on its Washington headquarters, the Securities and Exchange Commission proudly proclaims itself "the investor's advocate". On Tuesday, the SEC is likely to take a step to undermine its efficacy by adopting a rule requiring SEC registration of all hedge fund advisers. The rule was proposed in a 3-2 vote among the SEC's five commissioners in July. I was one of the dissenting commissioners.
Proponents of the new rule cite the SEC's "investor protection" mission. In reality, the proposal would imprudently divert SEC resources from that mission. Moreover, we have not sufficiently consulted relevant parties as witnessed by the brevity of the comment period and a request received just on Friday from the Commodities Futures Trading Commission for exemption of CFTC-registered advisers.
Proponents first argue that the rule will fill an information gap. But there are far more efficient ways to accomplish this, including some viable alternatives proferred by respondents in the SEC's consultation process. The rule's supporters also argue that registration would make it easier to deter and detect fraud. They cite 51 enforcement actions against hedge fund advisers during the past five years. But these 51 cases represent about 2 per cent of total actions brought by the SEC in that period. The new rule would not have prevented these cases, most of which concerned advisers who were already registered, too small to be covered by the rule, or were "garden-variety" fraudsters who would simply rename their scams to evade any rule.
Proponents of the new rule acknowledge that the SEC already has the authority to pursue fraud in hedge funds. But they insist the SEC should also conduct routine inspections of hedge fund advisers. A perfectly timed routine inspection might uncover fraud, but success is often elusive, particularly because the number of registered advisers dwarfs the number of SEC inspectors. The complexities inherent in hedge fund investing add to the SEC's already daunting task. The rule's proponents are setting up the SEC's inspection teams to fail. A better way to deter fraud is to continue to impose stiff penalties on fraudsters when we find them.
Proponents also argue that unsophisticated investors, including vulnerable pensioners, are already directly or indirectly investing in hedge funds, a phenomenon referred to as "retailisation". They point to growing pension fund investment in hedge funds, from $13bn to $72bn in six years. To put it in perspective, however, $72bn is only 8 per cent of the $870bn currently invested in hedge funds. Second and more importantly, $72bn is just 1 per cent of the estimated $6,400bn of US pension fund assets. The exaggeration of the risk for pensioners is particularly odd as the proposal would not reach unregistered private-equity fund advisers. Three times as much pension fund money is invested in private equity funds as in hedge funds. Could not potential fraud lurk in these "shadows" as well? In any case, federal and state law requires pension fund advisers to make decisions based on pensioners' interests.
A scan of recent headlines might also suggest that now is not the time to divert resources and manpower from mutual fund oversight, where 95m investors rely solely on the SEC's vigilance to protect them. The rule could also feed the false impression that SEC registration is a seal of approval. The proposal states that "unregistered hedge fund advisers operate largely in the shadows, with little oversight", implying that registered advisers, by contrast, are safe. But registration could damp healthy scepticism among investors, simply because more advisers will have passed the "SEC test". However, SEC registration does not mean the SEC will find problems before or after registration. Had the rule been in place in the 1990s, for example, it would not have prevented the collapse of Long Term Capital Management, which failed so spectacularly due to bad market bets, not fraud.
Proponents have responded to criticism by recalibrating their arguments and selecting from a smorgasbord of "justifications". My profound disappointment is that we have apparently chosen not to co-ordinate with our fellow regulators at the Federal Reserve, Treasury, CFTC or even our international counterparts such as the UK's Financial Services Authority, to discuss alternatives before taking a step which could be costly both to the SEC and investors.
The writer is an SEC commissioner appointed to the Commission in 2002; his term expires in 2008
对冲基金新规定的谬误
在美国证券交易委员会（the Securities and Exchange Commission，证交委）的华盛顿总部，有一行金字标语，标榜该委员会是“投资人的拥护者”。这一说法的效力很可能就要大打折扣了。星期二，证交委有可能要采取一项举措，规定所有对冲基金顾问必须到证交委登记。今年7月，该委员会的5位专员以3票赞成，2票反对，通过了该规定。我就是两个投反对票的专员之一。
新规定的支持者为此引述了证交委“保护投资人”的使命。但事实上，这项提议将会草率地分散证交委的资源，而不能专注于上述使命。另外，我们也没有充分征求相关各方意见，比如意见征询期限就非常短，而且到上周五，我们还收到商品期货交易委员会（Commodities Futures Trading Commission）的申请，要求豁免其注册顾问人员。
首先，支持者争辩说，新规定会解决信息不足的问题。不过要解决这个问题，有的是办法，而且有效得多，比如在证交委意见征询程序中就有人提出一些可行方案。新规定的支持者还争辩说，履行登记手续将便于防止和发现舞弊现象。他们举例说，过去5年来，就提起过51起针对对冲基金顾问的指控。但是这51起指控只占同一时期内证交委所有指控总数的2%。即使当初采取了新规定，也不可能防止这些个案的发生，因为大部分涉案的顾问要么都已登记过，要么都是小玩家而不受新规定的管束，又或者是“普通”舞弊者，他们只需将骗术改头换面，就能避开规管。
新规定的支持者承认，证交委要想追究对冲基金的舞弊行为，现在就有权力去执行。但是他们却坚持说，证交委应该对对冲基金顾问进行定期审查。真正把握好时机的定期审查，或许能揭露一些舞弊行为，但是成功往往可遇不可求。毕竟，登记的顾问数量远超过证交委审查员的数量。对冲基金投资本身已十分复杂，这会对证交委繁重的工作雪上加霜。支持新规定者正在组建的审查员队伍，是注定要失败的。防止舞弊的更好方法，就是继续严格执法，抓到舞弊者就严惩不怠。
支持者还争辩说，缺乏经验的投资人（包括领取退休金的弱势一群）现已开始直接或间接地投资对冲基金，这一现象被称为“零售化”（retailisation）。他们还指出，对冲基金中的退休金类基金在迅速增长，在6年内就从130亿美元提升到720亿美元。但是，宏观来看，720亿只占目前8700亿对冲基金总投资额的8%。其次，也是更重要的一点是，美国现有的退休基金资产总额大约为6.4兆美元，而720亿美元只占其中1%。夸大退休金领取者面临的风险非常奇怪，特别值得提出的是，新建议并不涉及未登记的私人资本基金顾问。退休基金投资于私人资本基金的总额是投入对冲基金的3倍。难道潜在的舞弊行为就不会在这些“阴影”下出现？无论如何，联邦和州的法律已经要求退休基金顾问须根据退休金领取者的利益来做决定。
如果我们注意到最近的新闻标题，也不难发现，现在并非分散证交委资源及人力的时候，因为证交委需要监管共同基金，这里有9500万投资人完全依靠证交委的督察来保障自己的利益。新规定还会造成一个错误的印象：仿佛到证交委去登记一下，就得到了认可。提议中的新规定说，“没有登记的对冲基金顾问在很大程度上是在阴影下运作，而并未受什么监督，”言下之意是，一旦登记后就万事大吉了。但是登记并不能排除某些投资人合理的怀疑，因为过了“证交委这一关”的顾问将会是多数。然而，办妥登记手续并不意味着证交委能够发现登记前或登记后所发生的问题。例如，假如这项规定在1990年代就已经落实，也无法防止长期资本管理（Long Term Capital Management）公司的破产。该公司的惨败并非舞弊造成，而是因为市场投机失误。
针对批评，新规定的支持者也调整了自己的说辞，并摆出了一连串的“理由”。让我深感失望的是，我们显然选择不去和美联储、财政部、商品期货交易委员会的同仁们合作，甚至也不去和我们的国际同行合作，比如英国金融服务管理局（Financial Services Authority）。我们不对其它方案进行讨论就采取行动。而这个行动很有可能为证交委和投资人带来沉重的代价。
本文作者是证交委于2002年任命的专员，他的任期2008年结束。
