Wall Street money managers told a House committee that hedge funds should disclose more to their bankers and improve their risk management but not be subject to mandatory registration, CNBC’s Melissa Lee reported from Capitol Hill.
The House Financial Service Committee is conducting hearings on proposed regulation of hedge funds. There is concern that the actions of hedge funds could affect individual investors who don’t know how the money has been invested.
“We are now concerned about the inadvertent consequence of a systemic-like event which causes pensioners who have no idea their managers invested in a derivatives currency arbitrage to lose money as a result of a Russian currency crisis,” said Rep. Richard Baker, R-Louisiana.
E. Gerald Corrigan, Goldman Sachs Managing Director, told the House Financial Service Committee that the risks facing investors are lower, but the possible consequences are greater.