Report to Propose That Hedge Funds Make Their Financial Condition Public
WASHINGTON -- Top U.S. financial regulators are expected to recommend that hedge funds disclose their portfolios' financial condition in quarterly filings that are available to the public, but they fell short of proposing broad new rules for the $300 billion industry.</br></br>The regulators' review of hedge funds has resulted in at least eight legislative and regulatory recommendations aimed at tightening standards for banks and broker dealers that either lend to or take part in risky investments, many of which are common to hedge-fund portfolios.</br></br>The recommendations are part of a report that will be released as early as today by the President's Working Group on Financial Markets, which includes top officials at the Treasury, Federal Reserve, Securities and Exchange Commission, and Commodity Futures Trading Commission.</br></br>After the near-collapse of Long-Term Capital Management LP last fall, Congress asked the group to find the best way to control hedge funds, which have widely been blamed for aggravating financial crises around the world. Hedge funds are largely unregulated investment pools in which the participants are primarily wealthy individuals.</br></br>Treasury officials outlined the report yesterday during a briefing for House Banking Committee members. Of the three recommendations that would require legislation, the proposal for new disclosures in hedge-fund quarterly filings would have the broadest impact on the industry.