Black Enterprise – Even in this age of market volatility and spotlighted failures, investors’ love affair with hedge funds endures. Yet investors will grow more sophisticated and will demand greatertransparency.
This was the somewhat rosy picture emanating from a hedge fund industry panel hosted by Dow Jones Indexes today [Sept. 26], two weeks after the blow-up of Connecticut-based Amaranth Advisors.
Panelists agreed that the main question was how to prevent future debacles, in the wake of Long-Term Capital Management, Bayou Management and now Amaranth. But regulation was not on this group’smenu. “Regulation did not stop fraud in mutual funds. Regulation is not the cure,” said Daniel Strachman, managing partner at A& C Advisors, a Fanwood, N.J.-based financial services firm. “Hedgefunds are already regulated, and it’s a mistake to continue to say they are not,” he noted, citing the Internal Revenue Services, the Department of Labor, the Securities and Exchange Commission andthe Commodity Futures Trading Commission as the main watchdogs.
