New Hedge Fund Regulation
New Hedge Fund Regulation | Hearings
(http://HedgeFundBlogger.com) Below is a short article excerpt from Ideoblog discussing how the US government may attempt to add more regulation to the hedge fund industry. I agree with much of what is said below - hedge funds should not be blamed for shorting securities which were over-priced, they ensure that markets become more efficient not less. Here is the first part of the article:
Hedge fund representatives will face Congress this week, another act in a play that will probably end with some bad regulation unless somebody gets some sense.
I’ve been complaining for more than four years about the prospect of hedge fund regulation, including registration requirements. For some samples, see, e.g., here, here and here. The bottom line is that hedge funds are not our current problem, but may be part of our solution. Hedge fund managers are highly incentivized to exploit current market inefficiencies, including by short-selling and forcing changes in lagging companies. It’s not surprising incumbent managers of target firms and their friends in Congress are unhappy.
Moreover, hedge funds face losing their investors if they lag. That’s why we’re seeing hedge fund liquidations, which may drag the market down. But this is a symptom of the market’s underlying problems, not a cause.
Forcing changes in hedge fund compensation and disclosures that reduce hedge funds’ ability to profit will undermine hedge funds and make markets and firms inefficient, which we can ill afford now. Restricting short-selling has already hurt hedge funds while doing nothing for market efficiency. Read more...
Read more articles such as this within our Hedge Fund Regulation Corner.