Saturday, March 10, 2007

Most Important Story of the Day -- MarketWatch: "Without hedge-fund regulation, there will be dark days ahead"

Thomas Kostigen's Ethics Monitor. Wow. I mean it.

Here in America, we do not believe in over-regulating things, and that is usually good. At lest it is sometimes good. I guess. Politicians can and do botch things up, doing more ill than good, even in instances when there is clearly a problem needing some kind of action.

A quote from Mr. Kostigen's article: "A major insider-trading case involving three hedge funds and several Wall Street firms came to light last week. Other cases of hedge-fund fraud have popped up in Denver, Greenwich, Conn., and a slew of other places around the country." In the first case cited, brokers, including one with compliance responsibilities, were taking money to illegally provide tradable information to the hedge funds in question. Cosy. From all the stories of bad actors running amok at hedge funds one could wrongly, but reasonably infer that most hedge funds are disasters waiting to happen, staffed by rogues and scoundrels who, if they cannot invest well enough to achieve their lofty investment goals, will try to hotwire the markets to get them to behave as they wish. Now I know, well, believe that it is not that bad. in reality only some of the hedge fund folks are that way. But the stories just don't seem to stop.

I want the cleanest markets we can get. I am against peddlers of so-called investments who take people's money and speculate with it or steal it. If the hedge fund industry can come up with a functional way to stop the scandals I am for it. Failing that, regulate away.

Without hedge-fund regulation, there will be dark days ahead - MarketWatch



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