SEC Defends Fund Registration
Traders Magazine, January 2005
The Securities and Exchange Commission has "distorted" the meaning of the word adviser in its new hedge fund registration measure, according to Phillip Goldstein, president of Kimball & Winthrop. Goldstein, who runs the Pleasantville, New York-based Opportunity Partners L.P. hedge fund, recently filed a lawsuit against the SEC in U.S. District Court in Washington, D.C. The fund has some $75 million in assets under management. "The legal fiction that forms the basis of the Hedge Fund Rule - that the security holders of a private fund are clients of the adviser to the fund itself - is irrational and arbitrary," according to Goldstein's compliant. "The Commission itself, in adopting the 1985 safe harbor rule, recognized that Congress intended to reach an advisory relationship that was direct and based on personalized investment advice."
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