HEDGE FUND HEARING IN CONGRESS 5/22/03
by: dollyinvirginia (F/DC burbs)
Long-Term Sentiment: Strong Buy 05/16/03 12:40 am
Msg: 142650 of 142680
What a coincidence. On the first anniversary of Mr. Elgindy's arrest.
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For Immediate Release:
Thursday, May 15, 2003 Contacts:
Peggy Peterson
(202) 226-0471
Brookly McLaughlin
(202) 226-0471
Baker Subcommittee to Examine Hedge Funds
The House Financial Services Capital Markets Subcommittee, chaired by Rep. Richard H. Baker (LA), will hold a hearing next week on the role hedge funds play in today’s financial markets. The hearing is scheduled for 10 a.m. on May 22 in room 2128 of the Rayburn Building.
“Hedge funds have served as a valuable tool for the sophisticated and institutional investor in managing market risk,” said Baker. “However, as more and more retail investors look to hedge funds as an investment option we must ensure that there are adequate investor protections in place.”
Following the Securities and Exchange Commission’s two-day roundtable on hedge funds, the Committee will hear from SEC Chairman William H. Donaldson on the SEC’s findings. The Subcommittee will discuss various topics such as disclosure and transparency, enforcement and fraud concerns, the current regulatory framework and marketing practices of hedge funds.
Especially of concern to the Committee is the proliferation of access to hedge funds by retail investors through so-called “funds of funds.” Traditionally, hedge funds were largely unregulated investment pools limited to high-net-worth investors.
However, more recently, “funds of funds” have been introduced in the marketplace. These are mutual funds that invest in hedge funds and are often marketed to retail investors, generally requiring a minimum investment of only $25,000.
“As investors seek to balance risk and returns in today’s difficult markets, hedge funds have grown quickly to become a $600 billion industry,” said Committee Chairman Michael G. Oxley (OH). “While they are a vital part of the capital structure and can be a valuable alternative investment, they are sophisticated instruments designed for sophisticated investors.”
The industry’s estimated 7,000 hedge funds may feature high levels of risk and potentially large returns or losses.
Some have advocated steps to increase transparency for investors and regulators of hedge fund activities, given their significant stake in the economy. Others caution against pushing this important component of our financial markets and engine of capital formation offshore.
Additional witnesses will be announced at a later date.
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