Thursday, 12 July 2007 08:00 The SEC voted unanimously on Wednesday to approve a rule prohibiting hedge fund advisors from committing fraud against fund investors. Among other things, the rule makes it illegal for an investment advisor to mislead investors regarding investing strategies, performance, a manager’s experience, or the risks of putting money in a fund. The rule asserts the SECs authority to bring action against advisors under the antifraud rules of the Investment Advisers Act. After the decision in Goldstein v. SEC put in doubt the SECs ability to regulate the industry, this action shows a commitment by the SEC to exert some influence over hedge fund managers. This rule will give the commission an important tool to help us police this market to deter misconduct, the agency’s chairman, Christopher Cox, said. The SEC held off voting on a second proposed rule that would raise the accredited investor standard from $1 million net worth to $2.5 million in total assets, not including residential real estate. The proposed rule has received unabashedly negative feedback from many investors and managers alike. Click to learn more about the SEC’s Hedge Fund Antifraud Rule.