In the past three weeks, the number of hedge funds withdrawing from the Securities and Exchange Commission since a court threw out the agency’s registration rule has doubled to 106, Bloomberg News reports. SEC spokesman John Heine said 70 left because it was not required, while the rest had other reasons - such as closing down. Among the latest to leave are New York-based D.B. Zwirn with $4.7 billion in assets under management and the $2.1 billion New York-based Mason Capital. While the number is hardly an exodus - there are still about 2,500 hedge funds registered with the SEC - Barry Barbash, formerly of the commission’s investment management division, told Bloomberg News that the large number remains registered to attract pension funds and charities, which take a keen interest in compliance. There has been no speculation on the reason for the sudden spurt in withdrawals. It does not appear to be linked to the revelation of Amaranth Advisors’ losses, since nearly all occurred before this week. Speaking of the now infamous Connecticut hedge fund manager, Bloomberg News notes that two years ago Tim Schnurr of Amaranth - which never registered with the SEC - wrote to the agency that “the hedge fund industry is a shining example of American free enterprise. Please do not try to fix something that is not broken.” Others might disagree with the broken part. Harvey Goldschmid, a former SEC commissioner who voted for the rule, lamented in an interview with Bloomberg News that he’s been saying “for a long while that a train wreck might well occur because of failure of adequate regulatory oversight...Amaranth only indicates the continuation of that concern.”
