S.E.C. Meets Over Hedge Fund Debate
We have more opinions on the regulation of hedge funds. Tomorrow (Wednesday) the S.E.C. meets to consider new rules for hedge funds--which S.E.C. Chairman Christopher Cox calls "risky investments that are not for mom and pop." This year's Amaranth meltdown would seem to support that view (Amaranth lost $6.5 billion in one month in 2006).
But as we've been writing--some argue that the trillion dollar hedge fund industry is good for investors and good for the markets.
Yasho Lahiri--Partner and Head of Hedge Fund Practice at Baker Botts and Damon Silvers who is the Associate General Counsel at the AFL-CIO took on the issue of hedge fund regulation on "Power Lunch."
Silvers says that what regulations are in place for hedge funds--is simply not enough--and that the funds are risky. He says that doesn't mean a whole sector would feel an effect of a hedge fund collapse--but like Enron --the failure would erode investor confidence and bring a crisis to public securities.
Lahiri believes there are enough regulations in place for hedge funds--and that the market would resolve any issues that come up--as he says it has. He points out institutional investing is driving the hedge fund industry-and that basically allows some protections--with institutional managers making sure their investments are safe as possible.