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June 15, 2006
SEC on Hedge Fund Regulation
The US Securities and Exchange Commission hopes that Securities regulators should move quickly to impose clear guidelines on hedge funds value investments. According to them, stricter guidelines will minimize the risk that might upset financial markets. There are over 9,000 hedge funds with $1 trillion of assets. A growing number of pension funds and endowments are using them to boost potential returns. Analysts said that the fund's assets have doubled since 2001 and is expected to double by 2010.
Hedge funds often invest in illiquid or complex assets for which there is no public market. Fund administrators rely on pricing from the fund advisers. Hedge funds typically disclose little about their investment strategies. The SEC already began requiring the funds to register basic information with the agency. While some hedge funds go for long-term investments, others look towards quick profits or higher dividends. Reuters has published an article on the Same Topic.
Last month, at a U.S. Senate hearing, Under-Secretary for Domestic Finance Randal Quarles said hedge funds "could have a disruptive impact if there were concentrations of positions or attempted mass liquidation in illiquid markets."
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