Hedge Funds: Should They Be Regulated?

Hedge funds are essentially unregulated mutual funds. They are pools of invested money that buy and sell stocks and bonds and many other assets, including foreign currencies, precious metals,\ud commodities, and derivatives. Hedge funds are structured to avoid Securities and Exchange Commission (SEC) regulation. In view of the growing impact of hedge funds on a variety of financial markets, the SEC in October 2004 adopted a regulation that required hedge funds to register as investment advisers, disclose basic information about their operations, and open their books for inspection. This report discusses various legislation before the 111th Congress that would impose various types and amounts of SEC regulation upon hedge funds