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Microcap & Penny Stocks : Naked Shorting-Hedge Fund & Market Maker manipulation? -- Ignore unavailable to you. Want to Upgrade?

To: ravenseye who wrote (1788)	9/21/2006 11:08:58 PM
From: rrufff	Read Replies (1) \| Respond to of 5034

SEC tightens hedge fund scrutiny By Jeremy Grant in Washington Financial Times Updated: 10:40 p.m. ET Sept 21, 2006 The Securities and Exchange Commission is tightening scrutiny of hedge funds by stepping up examination of the links between hedge funds and broker-dealers, particularly where they are owned by a hedge fund, a senior SEC official said. The move is a sign that the SEC continues to find ways to regulate hedge funds after a US court federal court in June overturned an SEC rule forcing hedge fund advisers to register with the agency. Walter Ricciardi, deputy director of enforcement, said: "I think some of the problems we've seen with hedge funds, one of the risk factors, red flags, is where they have their own broker-dealer. "That creates quite a conflict in the sense that investors' money is sitting there and a hedge fund decides to trade through their own broker-dealer and [the hedge fund] get a fee for such trading. "It gives them an incentive to run up trading fees. It may not be in the best interests of investors," he told the Financial Times. While the SEC's office of compliance already conducts routine inspection of broker-dealers, Mr Ricciardi said the enforcement division – which is focused on alleged wrongdoing in the securities markets – was "stepping up [the focus] on hedge funds". The SEC took similar steps in the wake of the collapse of Long Term Capital Management in 1998. The timing of the fresh scrutiny comes as Amaranth Advisors, a hedge-fund manager that lost about $4.6bn in the past month, has become the second largest hedge fund loss since LTCM. Last week, SEC enforcement chief Linda Thomsen said the SEC had used similar tactics to unearth evidence about late trading and market timing in mutual funds by hedge funds. "The regulated entities [broker-dealers] are our window into hedge funds," she said. "Everybody's doing business with them. We're going to find out what they're doing through what we can see." Mr Ricciardi said that hedge funds' fee structures might have "attracted some miscreants". "Probably the vast majority of hedge fund managers are very honest traders but in any environment where there is that much money and that much incentive to cheat you're going to have some bad apples," he said. The types of issues that the SEC had seen revolved around evidence that trades might not have occurred, even though they were being recorded as having taken place, he added. "You have statements coming from the hedge fund to investors and there may not be sufficient controls over that process. We've seen some instances where it's just a phoney statement and the investments shown on the statements do not exist. "A good question to ask is whether there are third party administrators to check to see that the investments are real and properly priced," Mr Ricciardi said. Copyright The Financial Times Ltd. All rights reserved. URL: msnbc.msn.com -------------------------------------------------------------------------------- © 2006 MSNBC.com

To: ravenseye who wrote (1788)	9/25/2006 12:18:20 PM
From: rrufff	Respond to of 5034

Regulators Scrutinize Amaranth By ANN DAVIS September 25, 2006; Page C3 online.wsj.com Regulators are examining the circumstances surrounding the multibillion-dollar losses this month by Greenwich, Conn., hedge fund Amaranth Advisors, people familiar with the situation say. Amaranth said last week it had lost roughly $6 billion, or 65% of its assets, in September, primarily on bad bets in the volatile natural-gas market. The inquiries are at an early stage, and it isn't clear that any regulators are probing wrongdoing. It is common for market regulators to inquire about major changes at large investment funds that may have an impact on markets. Hedge funds are lightly regulated investment pools for wealthy individuals and institutional investors such as pension funds and college endowments. Among the details that may arise in the reviews, these people say, are how Amaranth presented its trading strategies and internal controls to investors and whether it followed its policies as it had outlined them. The Securities and Exchange Commission has limited authority over such funds, but it does monitor how the funds represent their operations to investors and can investigate fraud, if any is suspected. A person close to Amaranth said the firm had been in touch with regulators since first announcing heavy losses on Monday Sept. 18. "Amaranth voluntarily reached out to its various regulators early Monday to apprise them of the situation, to answer any questions they may have and to offer its full cooperation," the person said. Among the entities Amaranth itself contacted, the person familiar with the firm says, are the SEC; the Commodity Futures Trading Commission, which regulates commodity and energy markets; the New York Mercantile Exchange, the primary U.S. energy market; Britain's Financial Services Authority, which oversees a widely used electronic energy-trading platform; and Canadian securities regulators. A spokesman for the CFTC said it couldn't comment on what it was or wasn't looking into. Officials at the other regulatory groups couldn't be reached for comment. Write to Ann Davis at ann.davis@wsj.com1 URL for this article: online.wsj.com