John M. Stahl, Esq., who is a freelance legal writer who is a graduate of Babson College and Vermont Law School, stated in a press release that he word on Wall Street for months was that the SEC was very serious regarding the March 30, 2012, deadline that required that every private equity and hedge fund advisers who oversaw at least $150 million in assets register with the SEC. Indications that many impacted advisers were banking on the SEC repealing the requirements or extending the deadline suggested that these financial industry professionals were recklessly turning a deaf ear to that message.
Ultimately, in a June 2011 press release on the issue, Shapiro has referred to a regulatory gap created an exemption under the federal Investment Advisers Act that Dodd-Frank eliminated and to which the March 30 deadline applied, and that that SEC-adopted rules that implemented “will fill a key gap in the regulatory landscape.” The press release expressed the concern regarding that exemption as “some advisers to hedge funds and other private equity funds have remained outside of the [Securities and Exchange] Commission’s regulatory oversight even though those advisers could be managing large sums of money for the benefit of hundreds of investors.”
In a speech by SEC Commissioner Daniel Gallagher at an Investment Adviser Association event the week of March 5 suggested that not heeding the looming deadline might have been justified. Gallagher reported that the SEC’s authority included exempting advisers from the new Dodd-Frank related registration requirements based on adequate proof that that exemption would be “necessary or appropriate in the public interest.” Gallagher’s statement indicated that that concern might not have been very significant and Gallagher stated that some new regulatory requirements could be unduly broad and costly regarding private fund advisers and other financial industry professionals. Gallagher’s remarks seemed contrary to SEC Chairman Mary Schapiro’s statement in the June 2011 press release.
Daniel LeGaye, Esq. of the LeGaye Law Firm P.C., commented in a telephone interview that “it’s too easy to say they’re [Schapiro and Gallagher] inconsistent.” He added that registration and disclosure issues were “very complex” and that that complexity did not excuse not studying and resolving concerns regarding the standards under Dodd-Frank.
LeGaye addressed the heart of the matter in saying that “She [Schapiro] is talking more philosophically; he [Gallagher] is talking more statutory.” This referred to Schapiro’s tough stance regarding both transparency in the financial services industry and anti-fraud provisions in the Investment Advisers Act of 1940 and Gallagher commenting on what the letter of the law did, and did not, require.
For the full text of the article and the comments of Daniel LeGaye, Click Here.