WEST PALM BEACH, FL (HEDGECO.NET) – The Federal Reserve Chairman Alan Greenspan has told the Senate Banking Committee that a U.S. Securities and Exchange Commission proposal to regulate the US hedgefunds will not work as hoped. Greenspan has made his opposition to SEC Chairman William Donaldson�s hedge fund initiatives in numerous occasions.
Last week in his testimony before the Senate Banking Committee, Greenspan said, “My problem with the SEC’s current initiative is that the initiative cannot accomplish what it seeks to accomplish. Hedge fund arbitrageurs are required to move flexibly and expeditiously if they are to succeed. If placed under increasing restrictions, many will leave the industry — to the significant detriment of our economy,” according to him.
Donaldson has used every opportunity available to him to press his case against hedge funds. In one of his remarks, the SEC Chairman said, “It is imperative that the commission be proactive and have the means to detect and prevent emerging, but as of yet unforeseen, harms and abuses that could work against those newly exposed to hedge funds and those on the other side of transactions with hedge funds.� He continued, by stating, “I would reject any regulatory proposal that would in any way impede the legitimate operations of hedge funds.�
But Donaldson�s hedge fund regulatory proposal has turned out to become one of the most controversial financial market proposals in recent news. Mounting opposition is also coming from the hedge fund industry market participants, who are also echoing remarks similar to Greenspan.
Greenspan also said that a growing number of new entrants into the hedge fund market would mean more funds chasing limited opportunities, as he stated, “Not surprisingly, the rate of return in this activity is reportedly declining. I would not be surprised if, with time, many of the new entries exited, some presumably following large losses,” according to the Fed chairman.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: [email protected]
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