Baltimore Sun- Members of Congress had a message of caution yesterday for the booming, unregulated hedge fund industry: Proceed with care, because lawmakers are increasingly willing to clamp down toensure discipline in the marketplace.
“I don’t think anybody can be confident that all’s entirely well here,” said Rep. Barney Frank, the Massachusetts Democrat who is chairs the House Committee on Financial Services. “It’s a matter of concern.”
Frank later told reporters he may introduce legislation later this year that would require hedge funds to save various documents, such as trade records and e-mail, which could be of potential useto law-enforcement officials in cases of fraud.
Also yesterday, the Securities and Exchange Commission approved a rule affirming its ability to sue hedge funds for fraud.
The SEC action follows legal rulings that tossed out a previous SEC rule requiring hedge funds to register with the agency and provide certain information.
“This rule will give the commission an important tool to help us police this market to deter misconduct,” said SEC Chairman Christopher Cox.
The developments underscored growing jitters that private investment pools such as hedge funds could spread instability throughout the financial markets.
