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July 11, 2006
US Government planning more Regulation for Hedge Funds
The Bush administration is taking a strong stance on hedge fund regulation and investigation. It believes that the possible fraud in the $1.2 trillion hedge fund industry has cautioned the government to wake up to the emerging threats. Wrongdoings in the lightly regulated investment pools make them prone to scrutiny by prosecutors, regulators and investigators. The corporate-fraud task force is also studying the scandal involving backdating stock options for executives. It is no secret that hedge fund and stock options issues have become part of the Bush administration task force agenda. The hedge fund fraud issue will be discussed at its next meeting later this month. Hedge funds regulating issues have been discussed several times in the federal appeals courts in the recent days.
Last month, a federal appeals court in Washington threw out SEC rules requiring hedge funds to register with the agency and undergo inspections of their books and records. But McNulty said critics who say his unit should be shut down are wrong. “The corporate fraud task force is alive and well,” McNulty said. “The need for it in our view is still very clear and strong.”
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