New York (HedgeCo.Net) – While many are looking to point the finger for the current financial crisis the country is in, many believe hedge funds are not to blame and any restrictions that ban short selling should be reconsidered.
Many executives are urging the Securities and Exchange Commission to reconsider their plans to make hedge funds publicly disclose short positions. Short selling is a common strategy among hedge funds, and many fear that funds will lose their edge if managers are required to show their hand too soon.
Richard Baker, President of the Managed Funds Association, wrote a letter to the SEC explaining that the current market conditions are the result of “poor lending, risk management and disclosure decisions, made historically by many financial institutions, and not from short-selling activities.” Baker is urging the SEC to reconsider the ban, and is instead opting for private disclosure of short positions.
The SEC passed the new restrictions last week after the recent string of events that included some of our nation’s top financial institutions going under. After Lehman Brothers declared bankruptcy, the SEC was quick to point out that hedge funds have been shorting the bank’s stock, with their speculation driving fear.
Cox assured the public that the U.S. was using “every weapon in its arsenal to combat market manipulation that threaten investors and capital markets.”
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