July 26, 2006
Do hedge funds need regulation?
And the debate continues. I have been writing on and off about how the authorities felt the need to regulate hedge funds. You know what, it makes me think? These hedge funds are like the goose that laid golden eggs and the authorities are not the greedy farmer, but just a misguided old man who does not know a golden egg when he sees one.
Last month, the U.S. Court of Appeals struck down a new rule by the Securities and Exchange Commission requiring mandatory registration with the SEC for most hedge funds. Many people believe that registration for hedge funds is a good thing. I mean when an investment pool that contains over $1 trillion in investments, you cannot let it function as it pleases. And that argument is right to some extent. I mean, hedge funds make high-risk bets and sometimes, if they collapse, they can take much of the world markets with them. Courierpostonline.com reports:
This is the third time in less than a year the appeals court has blocked the SEC from acting beyond its authority. According to The Washington Post, "Former SEC member Harvey J. Goldschmid, who voted to approve the plan, yesterday urged regulators to appeal to the U.S. Supreme Court, members of Congress or both. In the Pequot case, a former SEC lawyer who worked on the Pequot investigation before being fired by the agency has written a letter to key members of the Senate banking and finance committees alleging that the SEC dropped the probe because of political pressure."
Read more: Hedge funds must be regulated
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