Waterbury Republican-American – For now, Bruce McGuire and others in the hedge fund industry can rest easy; their detailed financial information will remain confidential and no anti-fraud unit willsniff around their work anytime soon.
A bill recently introduced in the state legislature to set up a unit within the state Department of Banking specifically to investigate fraud in hedge funds — lightly regulated, privately organized, pooled investment vehicles that use short-selling, leverage and portfolio concentration to make profits — is unlikely to make it out of the Appropriations Committee.
“It has not been voted upon and it probably won’t make it in this session,” said Rep. John E. Stripp, R-Weston, assistant minority leader and sponsor of the bill.
The genesis of the bill, Stripp said, is the increasing movement of pension funds into hedge fund investments.
“In the past, hedge funds have been used by rich people with big net worths who want to take a chance, and god bless them for that,” Stripp said. “The problem arises when it is money from the little guy, money from his pension plan. A fiduciary, to increase yields, may go to a hedge fund, but the fund may go down the drain, a company may go belly up and the government might have to step in to save the little guy.”
