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June 15, 2006
Hedge Fund Managers Defend Reticence
Hedge fund managers have been getting their share of bad publicity, mainly for their reticence in discussing the performance of their funds. They defended this reputation for playing their cards close to their chest though, at a gathering of top hedge funds officials in New York earlier this week. Citing U.S securities regulations as a reason for being close-mouthed, fund managers said that the rules prevented them from informing the public about the benefits of hedge funds, especially about their advantages in the financial market where they are bound to increase market liquidity, improve prices of illiquid securities, and enhance market efficiency. Washington Post reports:
The general solicitation rule is aimed at preventing hedge funds from being marketed to unsophisticated investors who don't understand the risks. But hedge funds are already restricted -- at least in the United States, although rules are less stringent elsewhere -- to high net worth investors, making the rule redundant, industry lawyers argue.
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