Washington – Four former U.S. Securities and Exchange Commission chairmen said too little is known about the activities of hedge funds and leveraged buyout firms, and that regulators must rein them in.
“I continue to be concerned about the influence of pooled vehicles in the marketplace,” William Donaldson said Wednesday at a forum of former agency chairmen. “I see it as a ticking, time bomb that is going to blow up at some point.”
Lawmakers have become increasingly concerned about the potential threats that hedge funds pose to financial markets since Amaranth Advisers LLC lost $6.6 billion in September betting on natural gas prices.
“The regulators don’t have the information about the unregulated entities,” said former SEC Chairman David Ruder. “There’s a big hole here that needs to be addressed.”
Former SEC Chairman Harvey Pitt said hedge funds are making big gambles in risky markets as they try to attract money from “risk adverse” investors, such as pension funds.
