Derivatives: Darth Vader's Revenge Message Board

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Non-Tech : Derivatives: Darth Vader's Revenge

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To: Stitch who wrote (528)	10/15/1998 2:52:00 PM
From: Henry Volquardsen	Read Replies (1) of 2794

Stitch, I'm sure there are some pension funds that are invested in the hedge funds that have blown up. Pension funds have been a very specific target of hedge fund sales. The pension fund industry is pretty heavily regulated by ERISA. One of the specific regulations I am aware of is on the hedge funds themselves. Any hedge fund that takes a certain amount of ERISA money, I believe over 15%, needs to comply with ERISA reporting requirements. These regulations are pretty complex and as a result most hedge funds will not take pension fund money if it puts them over this barrier. There are also regulations on the pension funds themselves but am not up on the specifics. The overriding guideline however is the prudent man concept. This requires them to act in a prudent fashion so even if something is allowable under the regulation the pension fund can get in trouble if the specific action is later deemed to have been imprudent. Of course this is tough to define and by the time you get around to the issue the damage is done. But it does have the effect of making pension fund managers more cautious. Henry

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