Washington Post – For years, hedge funds barely registered on the Washington agenda, and that was just the way they liked it.<\/p>\n
These investment pools designed for wealthy individuals flourished in the shadows: They collected more than $1 trillion; seized control of underperforming companies; and increasingly drew money from gigantic pension funds, including those of government employees.<\/p>\n
But now they are so large and numerous — there could be as many as 9,000 hedge funds — that federal regulators, state authorities and lawmakers are clamoring to learn more about them, including whether fraud and risky trading flourish in their secretive operations.<\/p>\n
This week, the Securities and Exchange Commission staff confirmed that it was conducting a sweeping inquiry into whether hedge funds are misusing information they receive from investment banks to get a jump on trades and sweeten their profits. Last week, federal prosecutors in New York charged a fund manager with criminal securities fraud, saying it cost investors $88 million. And today, German officials are putting hedge fund risks at the top of the agenda of the Group of Eight meeting in Essen, Germany.<\/p>\n