With hedge fund now the target of insider trading allegations, the alternative investments industry is again in the eye of a storm: PMs in handcuffs and wiretaps, cash payments in briefcases and 007 code names are tantalizing the public. Ron Resnick, of financial consulting firm CounselWorks, contends there is a smarter way to regulate hedge funds.
Resnick writes that there is a way to address common misconceptions and encourage productive public dialogue about hedge fund practices. The smarter way to address public policy concerns about fraud on investors, conflicts of interests and the risks of hedge funds is the opposite of the S.E.C. philosophy that portfolio managers should separate their personal investing from client investing.
S.E.C. holds the view that it is a conflict if a manager buys or sells for himself what he buys or sells for his clients.
Rather than separating managers’ personal investing from their client investing, the S.E.C. should require all managers to buy and sell precisely what they buy and sell for their clients. Read More » from NYT Dealbook.