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SEC official: Hedge fund appeal unlikely

Atkins doesn't think office would fight court's ruling

WASHINGTON -- The Securities and Exchange Commission isn't likely to appeal a federal court ruling last month that struck down the agency's new, stricter rules and random inspections for the $1.1 trillion hedge fund industry, Commissioner Paul Atkins said yesterday.

``I would be very surprised if the SEC decided to appeal," said Atkins, one of five SEC commissioners, in response to questions from reporters after a corporate governance forum in Washington.

A federal Appeals Court in Washington voided the SEC's requirement on June 23 for hedge fund advisers to register, ruling that the agency lacked proper authority. Hedge fund managers said the rules, designed to curb fraud, were too costly and unneeded.

``There is no basis for an appeal," said Philip Goldstein, a hedge fund manager at Pleasantville, N.Y.-based Bulldog Investors who successfully sued to block the SEC. Goldstein said an appeal would be a waste of money. ``What the SEC has spent on this exercise in illegal rulemaking is enormous," he said. ``Why throw more money at it?"

The SEC, which polices the US securities industry, had no comment on Atkins's remarks, said Michael Gonzales, an SEC spokesman. ``Commissioner Atkins is free to give his opinion," Gonzales said. SEC chairman Christopher Cox said after the court's ruling he had asked his staff to suggest alternative measures.

Hedge funds buy and sell a wide variety of investments, often taking more risk than pension or mutual funds, and they cater mostly to millionaires who can afford to take such risks.

Almost 1,000 hedge fund advisers registered by the Feb. 1 deadline under the now-voided rules.

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