Ahallmark of Wall Street lore dating to the Roaring Twenties and the Great Crash has been that the rich and influential trade secrets and make the most from the markets. And if they get burned, so can the rest of us.
The Securities and Exchange Commission, the nation’s top markets regulator, was formed after the crash to level the playing field and protect all investors. But now, more than 70 years later, market observers are worried that the secret moneymaker du jour for the wealthy – hedge funds – could cause history to repeat itself.
Hedge funds, or lightly regulated investment pools, manage more than $1 trillion, double the amount just five years ago. They are believed to be responsible for as much as half of the trading volume on the New York Stock Exchange each day.
Last year alone, an estimated 2,073 new hedge funds started up, or about one every 60 minutes during business hours.
