WEST PALM BEACH, FL (HEDGECO.NET) – The New York Attorney General, Elliot Spitzer has weighed in on the current regulatory questions pertaining to hedge funds. According to his remarks, policing the$800 billion hedge fund industry is unnecessary, because the funds do not pose many risks to the average US investor.
Spitzer said, �”I’m a little skeptical of the effort to focus so much attention on hedge funds right now, I don’t think the notion of regulating hedge funds as a general area should be getting quite as much attention as it has been.” Spitzer made his statements in New York on Tuesday, while testifying before a congressional subcommittee. Spitzer�s views according to him stems from the fact that hedge fund investors are generally more knowledgeable about the markets compared to the average mutual fund investor.
Spitzer, a frequent critic of the SEC, collaborated with the agency during the mutual fund scandals. The New York Attorney General was credited with uncovering the mutual fund scandals. Spitzer argues that the SEC�s pre-occupation with hedge fund regulatory issues has often made it difficult for the government regulator to uncover financial scandals.
Such statement has undoubtedly added some weight to many other views from hedge fund industry participants who largely think such regulation is unnecessary. In September 2003, the staff of the SEC put forward some recommendations calling for hedge fund managers overseeing investment management assets in excess of $1 million to be required to register with the SEC office.
Another financial markets heavy weight, Alan Greenspan, the Chairman of the Federal Reserve Board is also against such regulation. Greenspan made his own remarks during his testimony at the Senate Banking Committee. Hedge funds have steadily increased their transparency reporting to the fund investors, to the point that such information is readily available over the internet. When Greenspan was asked a question relating to systemic risks in the hedge fund industry, he replied, �”There may be systemic risks, but I haven’t found any yet.”
Since the 1998 collapse of LCTM, many other adjustments have been put in place by the hedge fund industry participants to address problems such as the ones raised by LTCM [Hedgeco.net previous story] The hedge fund industry has best policed itself, and additional oversight by government regulators have been hotly debated. Such public pronouncements by powerful US financial market actors have thrown such issue into limbo.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: [email protected]
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