Reuters – Hedge fund managers must maintain high levels of business integrity or face a government crackdown, the newly appointed chairman of the Commodity Futures Trading Commission told an industryconference on Tuesday.
The fast-growing industry, many of whose members were forced this month to register as investment advisors, already faces increased scrutiny from regulators, CFTC Chairman Reuben Jeffery III told several hundred hedge fund managers, lawyers and others.
But Jeffery warned the Managed Funds Association conference that regulators, including the U.S. Securities and Exchange Commission and the CFTC, will impose more severe regulatory measures if necessary.
“The more you do for yourselves, the less the government may do on your behalf,” said Jeffery, whose agency focuses primarily on regulating the commodities and futures markets, where hedge funds are big players.
Jeffery’s warning comes amid public concern that the industry, whose members trade long and short strategies in all kinds of securities, could pose a systemic threat to the financial system if large firms implode through fraud or mismanagement.
