Washington Post – Don’t be misled by the recent news that a U.S. court blocked the Securities and Exchange Commission from regulating hedge funds.
The $1.2 trillion hedge fund business hasn’t permanently escaped the clutches of regulators. It has only postponed the inevitable.
As these fast-moving, risk-prone funds attract a wider following, they present a higher and higher profile politically as well as financially and economically. In the words of the old jungle metaphor, the higher the monkey climbs the tree the more he exposes his rear.
The SEC’s mandate that hedge funds register with the agency and submit to random inspections was really quite a cautious step.
“It’s the mildest kind of regulation,” said Arthur Levitt Jr., a former SEC chairman. “If there is a hedge-fund scandal, and there probably will be some time in the future, Congress will step in with something much more draconian.”
