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WASHINGTON (September 30, 2003) —The following is a statement by Ralph A. Lambiase, President of the North American Securities Administrators Association (NASAA) and Connecticut Securities Director, regarding the Securities and Exchange Commission’s staff report “The Implications of the Growth of Hedge Funds.” NASAA was founded in 1919 and is the voice of securities agencies responsible for grass-roots investor protection and efficient capital formation. Its membership consists of the securities administrators in the 50 states, the District of Columbia, Canada, Mexico and Puerto Rico.

“State securities regulators support the Securities and Exchange Commission’s approach to improving hedge fund regulation. With more than $600 billion in hedge funds, increasing numbers of retail investors are using hedge funds to help attain their long-term investment goals. It is critically important that hedge funds and those who sell them are properly regulated to increase investor protection through registration, examination and disclosure.

“We encourage the Commission to move promptly to implement the staff report’s recommendation to require hedge fund advisers to register as investment advisers, already a requirement in some states. This would be a positive step toward increased investor protection, because it would subject registered hedge fund advisers to inspections and examinations. We also support the report’s recommendation to require additional disclosures to hedge fund investors and increased investor education to ensure that investors fully understand the risks of hedge fund investing.”

“NASAA was pleased to participate in the SEC’s hedge fund roundtable earlier this year and to submit a comment letter, which outlined our recommendations for increased oversight. We look forward to working with the Commission to ensure that the residents in our states who invest in hedge funds are fully protected.”

For More Information:
Bob Webster, Director of Communications