Back to the drawing board for the SEC.

Back to the drawing board for the SEC.

Back to the drawing board for the SEC.

A summary of what's in the major U.S. newspapers.
June 24 2006 3:22 AM

Clipping the Hedges

The New York Times leads with what could be a fatal blowto the Security and Exchange Commission's authority to oversee the fast-growing hedge-fund industry. A unanimous ruling by a federal appeals court panel said the SEC does not have the authority to regulate these often-volatile investment pools that now comprise more than $1 trillion dollars in assets. 

The Washington Post leads with the Bush administration's muscular defense of its secret program that began shortly after the 9/11 attacks giving counterterrorism officials access to a huge international database so they could examine the banking transactions of thousands of people within the United States to uncover possible links to al-Qaida. The Times first broke the story  and off-leads with it today, emphasizing the administration's attacks on the media for disclosing the existence of the program.

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The Wall Street Journal leads its online world-wide newsbox with the arrests of seven men in Miami accused of plotting to blow up the Sears Tower in Chicago. The plot was more "aspirational than operational," the FBI said, but Attorney General Alberto Gonzales warned that so-called homegrown terrorists "may prove to be as dangerous as groups like al qaeda."

The Los Angeles Times leads with Gov. Arnold Schwarzenegger saying no to a White House request for more than double the number of California National Guard troops he promised to deploy along the border with Mexico. He says it would stretch the Guard too thin, but one Democrat tells the LAT, "This so-called request [from the White House] was a phony political request to try to give Schwarzenegger political cover" in an election year.

Concerned that a growing number of unsophisticated investors were becoming exposed to high-risk hedge funds through pension funds and other investments, the SEC in 2004 passed a rule giving it authority over any fund manager with at least 15 clients. But a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit ruled unanimously that the SEC cannot treat investors in a hedge fund as "clients" of the fund manager. The Journalsays the decision abruptly halts, for now, the SEC's attempt to regulate "the murky world of hedge funds" and "not only forces the SEC to go back to the drawing board, but may reopen again the contentious question of whether there should be any government oversight of hedge funds at all." The Times notes that the ruling will not affect an SEC investigation into possible insider trading by Pequot Capital Management, disclosed in a Times article on Friday.

Vice President Cheney called the bank data-sifting program "absolutely essential" to preventing further terror attacks against the United States. Treasury Secretary John Snow called it "government at its best" and said disclosures by the media would only help the world's terrorists. Some Democrats and civil liberties groups criticized the administration for acting outside the law and not adequately briefing Congress about the program. White House spokesman Tony Snow said legislative oversight committees "know all about it." The Times notes possible disagreements between the Bush administration and the Belgian consortium known as SWIFT, which maintains the database.

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Federal law enforcement officials decided to move in on the alleged Miami terror plotters even though the men possessed no weapons or explosives, had no expertise to wage their alleged jihad, and posed "no immediate threat." The suspects were said to have taken oaths of allegiance to Osama bin Laden, but the Journal points out that it is not clear whether the ringleader, Narseal Batiste, sought out a relationship with al-Qaida, or whether the FBI informant who infiltrated the group had suggested the idea. The New York Times observes that the indictment "presented a less alarming picture" than the relentless cable television coverage that began almost as soon as the arrests had been made public Thursday night.

Everybody goes inside with the fierce firefights near the Green Zone that prompted the Iraqi government to clear the streets for several hours on Friday afternoon. The U.S. military reported the deaths of five more Americans. A bomb killed 12 worshipers at a Sunni mosque, and the Washington Post says such attacks at mosques in Iraq are causing some Muslims to give up on the holy rite of group prayers. "I hope God will understand that I am forced to do this," says one.

All the papers report the resignation of Transportation Secretary Norman Mineta, who, at age 74, told the president "it is time for me to move on to other challenges." Mineta will probably be best remembered for helping to set up the Transportation Security Administration (the folks who make millions of Americans a day take their shoes off at the airport).

A Prime-Time Life: Television producer Aaron Spelling died in Los Angeles. His hit parade includes Charlie's Angels, Dynasty, Beverly Hills 90210, Melrose Place, Love Boat, Fantasy Island, and The Mod Squad. He called his creations "mind candy." The critics called them mindless. Spelling was 83.