In the US, the battle over the regulation of hedge funds has been gaining intensity for some time. Congress has been discussing regulation of the industry for over two years. On November 10 2008, Senator Charles Schumer told a securities industry group that he thought it was time for a single US regulator to be given responsibility for the regulation and oversight of private capital firms, including hedge funds. On November 13 2008, the House Committee on Oversight and Government Reform heard testimony from five leading US hedge fund managers. Committee chairman Henry Waxman began by observing that, with assets exceeding $2 trillion, hedge funds have the potential to constitute a systemic threat to the global economy. He and other congressmen referenced several concerns including excessive leverage, the lack of transparency and the disproportionately favourable tax treatment accorded to hedge fund earnings. The hedge fund managers offered statements defending their industry, their personal wealth, the capital gains tax treatment and the need for confidentiality. One manager indicated that he could see the need for some limitation on leverage. A manager made the point that excessive US regulation would exacerbate the trend towards concentrating hedge fund activity and related jobs outside the US.
February 01 2009
