Hedge Funds Skeptical of SEC Plan to Let Firms Conceal Stocks

(Bloomberg) — A controversial U.S. Securities and Exchange Commission plan that would let many hedge funds conceal their stock picks is generating pushback from an unlikely source: hedge funds.

The industry’s main trade group is questioning whether the SEC fully considered the impact of significantly slashing the number of firms that have to disclose their holdings. The Managed Funds Association, in a comment letter posted Friday on the regulator’s website, urged the agency to do more analysis before moving forward.

“The proposing release underestimated the costs associated with the loss of publicly available information,” the Washington-based group said in a letter dated Sept. 29.

At issue is a July SEC proposal that would mark a dramatic overhaul of fund reporting rules that haven’t been updated in 40 years. Under the regulator’s plan, only investors who hold at least $3.5 billion in equities would have to reveal their holdings quarterly, an increase from the current threshold of $100 million. Stock holdings are disclosed in what are known as 13F filings.

SEC spokeswoman Judith Burns declined to comment on the MFA letter.

The MFA said it supports the SEC’s efforts to review disclosure rules. Still, the trade group’s skepticism adds another hurdle for a plan that has already been blasted by public companies, investor advocates and mutual funds. While those industries often clash over…

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