MSN MoneyCentral – As financial lore has it, five pals scraped together $100,000 in 1949 to start what became the first hedge fund. Their ringleader and mastermind, Alfred Winslow Jones, was aFortune magazine writer and former U.S. diplomat who had a bold new idea.
Today some 7,000 hedge funds in the United States command an estimated $750 billion to $1 trillion in assets and leave a wide footprint in the financial markets, as they are believed to account for as much as 20 percent of all U.S. stock trading. They’re about to be brought under new supervision by federal regulators concerned about their explosive growth and virtually unbridled operations.
But some big hedge funds are using a loophole to get around the new oversight, and the new regulation itself is being challenged in the courts.
Under a rule that bitterly divided the five-member Securities and Exchange Commission when it was adopted in October 2004, a new regime begins on Wednesday for these high-risk, largely unregulated and secretive investment pools. Hedge funds have traditionally been the investment domain of the wealthy but have become popular with small investors in recent years.
