Securities and Exchange Commission Chairman William Donaldson is determined to increase his agency's oversight of the $750 billion hedge fund industry, even if it means creating special measures to register its advisers. Donaldson recently told a group representing investment advisers -- including hedge fund and mutual fund managers -- that the agency was "evaluating a form of registration and an oversight regime for hedge fund managers different from what we use for other investment advisers," but offered no further details. He said the SEC's knowledge of the estimated 6,800 hedge funds in the U.S., which manage about $600 billion, was "woefully inadequate." He said registration would help ward off problems such as fraud, and prevent circumstances such as the role that hedge funds played in the mutual fund market-timing scandal that was uncovered last year. Hedge funds have been a target of the SEC's attention since 2002, when Harvey Pitt was in charge of the agency. But any proposals for legislation have taken a back seat to turmoil in the SEC's leadership and its subsequent struggle to get a handle on mutual fund reform. The agency's staff issued a report last September calling for additional oversight, just before the hedge fund Canary Capital Partners emerged as a central player in the market-timing scandal that continues to roil the $7.6 million mutual fund industry. Donaldson, who replaced Pitt last year as SEC chairman, may be rethinking his position on what hedge funds would have to disclose, meaning it may not be the same information required under the Investment Advisers Act of 1940. But because he still faces opposition from fellow Republican-appointed commissioners, observers are left to glean his occasional utterances and speculate on how reforms will look, if they happen at all. The SEC can inspect registered investment advisers' records, and it claims that such a measure will ward off potential conflicts of interest when managers run both hedge funds and mutual funds.