SEC's latest proposal makes no sense.(Editorial)

Investment News, February, 2007

The Securities and Exchange Commission continues to forge ahead in its quest to wrap some kind of regulatory lasso around the $1.2 trillion hedge fund industry. Why it is doing so isn't entirely clear. The SEC's latest proposal, introduced in December and open for public comment through March, would significantly narrow the pool of potential investors by setting a minimum-liquid-net-worth requirement at $2.5 million, not including the value of an investor's home.

The current minimum standard, which was set in 1982, requires an investor to have a total net worth, including the value of a home and a range of other assets, of $1 million. The liquid-asset requirement, which automatically excludes most real estate from the calculation, is no...

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