The Independent- The Financial Services Authority has hit out at hedge fund managers over their “complacent attitude” towards setting up internal controls to prevent market abuse.
The criticisms, which followed a series of visits by the watchdog to several London firms as part of its ongoing inquiry into market abuse, will come as a blow to the $1.7 trillion industry as it seeks to preempt regulatory clampdowns by governments on both side of the Atlantic.
“Some [hedge fund managers] had a high level of awareness and appropriate controls in place, whilst others were less aware, had fewer controls and demonstrated a complacent attitude to the risks. We are disappointed by some of what we saw,” the watchdog said.
“We will be following up with the firms visited and are launching a programme of visits to a wider cross section of managers over the coming months to assess formally their market abuse systems and controls.”
The industry has tried to head off a regulatory clampdown by governments increasingly concerned with their influence by coming up with a voluntary code of practice. European and American regulators have raised concerns about the threat to economic stability amid high-profile blow ups of funds caught out by the summer credit crunch.
