Another Hedge Fund Cop

If hedge funds were blues singers, Connecticut would be Mississippi, and Greenwich would be the Delta. Now that more regulations are coming from the Feds, Connecticut’s Attorney General, Richard Blumenthal, wants even more. It’s not just Eliot Spitzer that Wall Street has to worry about.

Mr. Blumenthal is putting together a task force of regulators and hedge-fund executives to jump-start changes. He says he will move to impose his recommendations on any hedge fund with operations in Connecticut or pursue necessary legislation to allow him to put the new rules in place.
Among the changes he says he could pursue: forcing funds to disclose much more about who audits their holdings and whether they have conflicts of interest with the fund’s management; changing current civil and criminal penalties for hedge-fund fraud; and requiring funds to tell prospective investors whether other investors received preferential terms. He also would like to force funds to disclose any fees paid by brokers or other parties.
But Mr. Blumenthal concedes that he doesn’t wield the same power as Mr. Spitzer, potentially undercutting his efforts. For one thing, under Connecticut law, he can bring only civil charges, unlike New York, where Mr. Spitzer’s arsenal includes the authority to bring criminal charges.

Posted by on November 7th, 2005 at 3:58 pm


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