SEC Enforcement Division Adds Hedge Fund Unit

July 31, 2007 ( - The U.S. Securities and Exchange Commission (SEC) has created a hedge fund unit within its enforcement division in its efforts to combat insider trading.

Reuters reports SEC chairman Christopher Cox on Tuesday told the Senate Banking, Housing and Urban Affairs Committee that the unit is working with other federal law enforcement agencies and self-regulatory organizations. The hedge fund industry has been under heavy scrutiny since the high-profile collapse of Amaranth Advisors LLC (See San Diego Retirement Fund to Feel Hit from Hedge Fund Collapse ) and well-publicized problems at two Bear Stearns hedge funds (See  PLANSPONSOR’s NewsDash – June 25 ).

Cox said the agency is addressing fraud in a variety of ways, including aggressive enforcement efforts, targeted examinations, rules and investor education, according to Reuters. He also said the agency has focused efforts to protect the most vulnerable investors, such as the elderly and military personnel.

The SEC recently approved a rule prohibiting hedge fund advisers from defrauding investors by making false or misleading statements (See SEC Rule Aimed At Protecting Hedge Fund Investors ).

Cox on Tuesday also  announced an expansion of the SEC’s Office of Investor Education and Advocacy.