Dorsey partner Mike Piazza considers in The Anti-Fraud Network Newsletter the growing demand for some form of government regulation over hedge funds. Estimates of over US$1.2 trillion currently invested in hedge funds, together with the recent failure of Amaranth, a hedge fund that focused on natural gas trades, have provided political impetus to address the lack of regulation over and transparency of these pooled investment vehicles.
As a result, in December 2006, the United States Securities and Exchange Commission (SEC) released proposed new rules that would govern hedge funds and, specifically, the advisors that guide those funds. Piazza describes the reaction to the antifraud aspect of the proposed rules as "predominantly negative" with concern over the potential adverse impact on the competitiveness of U.S. financial markets. Nonetheless, he predicts that the SEC will authorize in some form a new antifraud rule applicable to hedge fund advisors before the close of 2007.
"Proposed New SEC Anti-Fraud Rule for Hedge Funds and Advisors" was published in the July 2007 edition of The Anti-Fraud Network Newsletter.