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Microcap & Penny Stocks : Tokyo Joe's Cafe / Societe Anonyme/No Pennies -- Ignore unavailable to you. Want to Upgrade?

To: TokyoMex who wrote (5295)	10/5/1998 5:49:00 AM
From: TokyoMex	Read Replies (1) \| Respond to of 119973

SEC Mulls a Formal Look At Exposure to Hedge Funds By CHARLES GASPARINO Staff Reporter of THE WALL STREET JOURNAL The U.S. Securities and Exchange Commission, concerned about Wall Street's dealings with hedge funds, is considering conducting a formal, in-depth inspection of major brokerage firms to measure their exposure to the hedge-fund business. The agency's scrutiny of Wall Street's hedge-fund-related exposure, at least so far, has tended to be routine and informal. However, following the near-collapse of Long-Term Capital Management LP, government regulators are under pressure from Congress to keep a closer eye on this complex and secretive investment business. And even among regulators, some fear other hedge funds may be on the brink of trouble and believe an extra dose of scrutiny may be in order. As a result, the SEC, which regulates the securities industry, is considering a plan to conduct "sweeps" in which its Office of Compliance Inspections and Examinations would do on-site inspections of brokerage firms, according to people close to the matter. This would involve reviewing books and records, as well as interviewing key executives to get a more precise picture of their dealings with the hedge-fund industry, these people say. Should the compliance office find instances of possible fraud, it could refer them to the SEC's enforcement division. No final decision has been made. The SEC is clearly concerned about hedge-fund exposure on Wall Street, but heightened scrutiny of the sort it is mulling would likely be unsettling to the securities industry. So far, brokerage firms' relationships with hedge funds have largely been kept out of the regulatory spotlight. Because these investment portfolios cater to very wealthy, sophisticated investors, they aren't required to register with the SEC and face minimal government scrutiny. SEC Chairman Arthur Levitt has indicated that other hedge funds may be at risk of failing. Speaking last week before a House Commerce subcommittee, Mr. Levitt also said he is concerned about the negative effect -- particularly for individual investors -- if another large hedge fund's problems were to roil an already tumultuous stock market. Mr. Levitt stopped short of saying he will push for tighter regulatory control of hedge funds. However, by increasing surveillance of Wall Street's dealings with the funds, the SEC could address lawmakers' calls for greater scrutiny without a change in current law. SEC officials started gathering information on the impact of Long-Term Capital's near-collapse several weeks before news of its huge losses stemming from a series of leveraged bets on international bond markets became public. They contacted members of Long-Term Capital, of Greenwich, Conn., to discuss the fund's deteriorating finances, and got in touch with Wall Street firms to learn about their exposure to the problem-plagued hedge fund. "Of course, the SEC is checking to see the firms' exposure in light of the Long-Term Capital and bond-market situation," one SEC official said. However, people close to the matter say this has mainly involved informal phone checks and is far more relaxed than the sort of rigorous examination now under consideration.