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.<\/p>\n
“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.”<\/p>\n
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.<\/p>\n
Also yesterday, the Securities and Exchange Commission approved a rule affirming its ability to sue hedge funds for fraud.<\/p>\n
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.<\/p>\n
“This rule will give the commission an important tool to help us police this market to deter misconduct,” said SEC Chairman Christopher Cox.<\/p>\n
The developments underscored growing jitters that private investment pools such as hedge funds could spread instability throughout the financial markets.<\/p>\n