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Washington Post - The Bush administration’s decision to drop proposed money-laundering rules for hedge funds is "inexplicable, ill-timed and unwise," Sen. Carl M. Levin (D-Mich.) said yesterday.
Hedge funds, private investment pools whose investors are often wealthy individuals, have drawn increased scrutiny during the financial crisis. But even before the market troubles, some legislators worried that the largely unregulated funds could serve as a vehicle for money laundering, perhaps for tax evaders or terrorists.
"Hedge funds are unregulated financial companies that can handle millions of dollars in offshore money without any legal obligation to check who is behind the funds or report suspicious activities," Levin said in a statement. "But instead of plugging the hedge fund regulatory gap by issuing a final rule, the Administration went the opposite way, withdrew its anti-money laundering proposal, and offered nothing in its place."
Washington Post - Seven years ago the Patriot Act required every financial institution to establish a program to combat money-laundering.
But the roughly $2 trillion hedge-fund industry today remains free of any such government restrictions, and this week the Treasury Department formally withdrew its once proposed rules.
"Hedge funds do represent some risk because their operations and the identity of investors are generally not very transparent," said Steve Hudak, a spokesman for the Financial Crimes Enforcement Network of the Treasury Department. But "that risk needs to be studied and carefully assessed prior to implementing any anti-money-laundering regulations."
Hedge funds, which are largely unregulated investment pools whose investors are often wealthy individuals or sophisticated financial firms, have drawn increased scrutiny during the financial crisis.
Reuters - The British arm of asset management group Aviva Investors is betting that investor interest in hedge fund-style products will survive the credit crisis and rebound once market turmoil abates.
Paul Abberley, UK CEO, told Reuters Aviva Investors would boost its high alpha and absolute return business in the coming months and expand its investment team across the board.
Hedge funds and similar products have come under scrutiny as investors question how modest performance in a market turmoil chimes with the high fees charged by the industry. Hedge funds claim to be able to generate returns in bad times and good.
Abberley, CEO of Aviva’s London office since the beginning of August, said: "We believe clients will look for more higher alpha (excess returns) products than in the past and we need to be able to offer excellence in those areas."
Reuters- It’s turning into a busy summer for U.S. lawyers who advise hedge funds as the industry faces growing questions about potentially manipulative trading and regulators are knocking at fund managers’ doors.
With the markets in turmoil, the loosely regulated sector is under increasing scrutiny. The U.S. Securities and Exchange Commission recently sent subpoenas to more than 50 firms regarding possibly abusive trading activity.
Some funds have sought advice to be sure they are complying with the rules, which include new limits on short-selling.
Others are calling for help to set up new funds as managers try to find ways to make money in a rough market.