San Francisco Gate – In the investing world, it can be a short three-step walk from problem to new regulation.
First, a problem is uncovered. Next, “victims” or “losers” are identified. Then, regulations and legal remedies are proposed.
So when a hedge fund run by Amaranth Advisors hedge fund blew up and made headlines last week — ultimately dropping about 65 percent of its value on losses in the natural gas industry — it was a short walk to legislators taking another whack at regulating hedge funds.
I say “another,” because regulators had hoped to lasso the hedge fund industry this year, creating rules that required these private investment pools to register as investment advisers. A court overturned the rule, but the Securities and Exchange Commission still wants to rope in hedge fund managers.
Amaranth created another public-relations opportunity for the regulators.
