Legislation introduced Thursday by Sens. Charles Grassley, R-Iowa, and Carl Levin, D-Mich., would give the Securities and Exchange Commission the authority to regulate municipal or other hedge funds with $50 million or more in assets.

Grassley said that the Hedge Fund Transparency Act is aimed at "closing a loophole in the securities laws that allows hedge funds to operate under a cloak of secrecy." Under the current securities laws, hedge funds are not treated as regulated investment companies such as mutual funds or closed-end funds that must submit public documents to the SEC on a periodic basis.

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