February 23, 2009
Celebrating 25 Years - Retained Executive Search Specializing in High Technology/Venture Capital
SEC is long overdue to crack down and monitor hedge funds. See WSJ and Europe. There is a reason JP Paulson and George Soros have made in 07 alone $3.7B and$ 2.9 B personally, respectively, exploiting GAAP accounting by buying insurance CDS and Puts and than burning the asset class down I mean shorting the assets to nothingness and a rating agency down grade and government takeover or dilution. Elimination of the uptick rule July 07 and the Crime of REG SHO which breaches SEC ACT of 1934 sec 17A is fooling no one. Enforce the law and Regulated these thugs. There is a reason SEC made RIC comply with the Investment Company Act of 1940 and that was to protect investors, so why does the SEC allow Hedge Funds to run the table hurting investors. It is not the investor qualification rule it is the trading techniques they use to manipulate the market. SEC is not fooling the investors they are irresponsible in their duties. Per WSJ By CASSELL BRYAN-LOW LONDON -- One of the world's largest hedge-fund groups is set to propose new measures aimed at pushing the secretive money managers to open up, in what is likely to be a controversial effort to fend off a regulatory crackdown on the industry.
The Alternative Investment Management Association, a U.K.-based trade group with members in many countries including the U.S., says it plans to propose as early as Tuesday that hedge- fund managers agree to a number of measures that many U.S.-based funds have resisted. The measures include registering with regulators and having regular contact with authorities about their businesses.
European Central Bank President Jean-Claude Trichet
The move comes as policy makers around the globe are gearing up to reform financial regulation in ways that are almost certain to be more onerous for hedge funds. On Monday, European Central Bank President Jean-Claude Trichet called the current crisis a "loud and clear call" to extend regulation to hedge funds and other "systemically important" institutions. Over the weekend in Berlin, European leaders agreed that hedge funds must be regulated as they prepared a common position for a Group of 20 summit on financial reform in London in April.
Many hedge-fund managers have so far been reluctant to agree to voluntary standards or provide more information to authorities, amid concerns that compliance could be costly or reveal too much about their investment strategies to competitors. In the U.K., for example, an effort to set up a Hedge Fund Standards Board has attracted only a small number of the estimated 400 or so funds operating in the U.K. -- a fact that recently drew ridicule in parliamentary hearings. The board's founders say its members represent about half the assets managed by U.K. hedge funds.
The Alternative Investment Management Association says it is seeking greater alignment of regulatory regimes in different countries. Andrew Baker, AIMA chief executive, says the British model of registration and oversight should be applied to the U.S. -- a suggestion he acknowledges will likely be controversial among U.S. members.
In the U.K., investment professionals and others who work at hedge funds must obtain authorization from regulators by proving that they have adequate qualifications or experience.
The Financial Services Authority, the U.K. regulator, also has a group of specialists who are in regular contact with the roughly 40 largest hedge funds. U.S. regulators, by contrast, don't have a similar dedicated hedge-fund group.
In 2006, a U.S. court stymied an effort by U.S. regulators to force hedge-fund advisers to register with the Securities and Exchange Commission. Some U.S. lawmakers are currently seeking to revive the registration requirement for hedge funds with at least $50 million in assets, among other measures.
A representative for the U.S. hedge-fund industry's biggest lobbying group, the Managed Funds Association, wasn't immediately available for comment.
Mr. Baker and his group also are proposing greater disclosure by hedge funds on both sides of the Atlantic about activity such as shorting, in which they make bets that certain stocks will fall. AIMA suggests publishing aggregate data on short positions, rather than requiring individual funds to disclose their bets, as U.K. regulators recently proposed. AIMA also is looking into what other data should be disclosed to help regulators monitor risk, such as the levels of borrowing by hedge funds or the liquidity of their underlying investments.