Waterbury Republican-American – For now, Bruce McGuire and others in the hedge fund industry can rest easy; their detailed financial information will remain confidential and no anti-fraud unit willsniff around their work anytime soon.<\/p>\n
A bill recently introduced in the state legislature to set up a unit within the state Department of Banking specifically to investigate fraud in hedge funds — lightly regulated, privately organized, pooled investment vehicles that use short-selling, leverage and portfolio concentration to make profits — is unlikely to make it out of the Appropriations Committee.<\/p>\n
“It has not been voted upon and it probably won’t make it in this session,” said Rep. John E. Stripp, R-Weston, assistant minority leader and sponsor of the bill.<\/p>\n
The genesis of the bill, Stripp said, is the increasing movement of pension funds into hedge fund investments.<\/p>\n
“In the past, hedge funds have been used by rich people with big net worths who want to take a chance, and god bless them for that,” Stripp said. “The problem arises when it is money from the little guy, money from his pension plan. A fiduciary, to increase yields, may go to a hedge fund, but the fund may go down the drain, a company may go belly up and the government might have to step in to save the little guy.”<\/p>\n