Today's WSJ....I especially like the last paragraph. It makes me feel so secure that someone is on the lookout......
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Because hedge funds rely heavily on short-term
capital gains, many such firms have structured
their partners' investments to make them
appear, for tax purposes, long-term instead.
Rep. Barbara Kennelly, (D., Conn.) introduced
legislation earlier this year aimed at limiting
those practices.
The proposal by Ms. Kennelly, who is leaving
Congress to run for governor of Connecticut,
didn't get very far. But Mr. Neal vowed to
revive her efforts, writing that "the deal that the
management of Long-Term Capital entered into
with UBS is an example of a transaction that the
Kennelly legislation would have shut down."
It will be difficult, some investment lawyers and
tax experts warn, for the government to
effectively rein in such transactions, and that
any attempt could backfire. One reason
Congress didn't take up the Kennelly proposal
"is that we were uncomfortable with the
implications for liquidity in the market," said
Kenneth Kies, who was chief of staff at
Congress's Joint Tax Committee until the
beginning of this year. Mr. Kies said his current
employer, the accounting firm of
PricewaterhouseCoopers, does some tax work
for Long-Term Capital, but that he hasn't
personally worked with them or any other
hedge funds.
"There's a lot at stake here," Mr. Kies said. "You
could end up doing something with
ramifications beyond what we understand." |
