SEC Investigating Prominent Hedge Fund
A front-page article in Friday's New York Times reports that the SEC is investigating Pequot Capital Management, one of the nation's most prominent hedge funds, for possible insider trading. The SEC declined to confirm or deny the report. Pequot is one of the oldest and most well known hedge funds in America.
Hedge funds, because their services are generally geared to sophisticated investors, have previously operated relatively free from regulatory scrutiny. However, the investigation of Pequot may signal that the SEC is prepared turn more of its attention to the regulation of hedge funds. Although the SEC has investigated several hedge funds in recent years, it has never investigated a fund as large or widely known as Pequot.
In a related story, Congress is investigating charges by former SEC attorney Gary J. Aguirre, who headed the Pequot investigation prior to his termination. Aguirre claims that he was fired because his superiors at the SEC did not want him to take testimony from a prominent investment banking executive in connection with the Pequot investigation. Congress is investigating whether political considerations played a role in the SEC's firing of Aguirre, which occurred only 11 days after he was awarded a two-step merit pay increase and praised for his work on the Pequot investigation.
Perhaps now after this week of the Bear Stearns rescue, we can put to rest the question of whether the Hedge funds ought be regulated. Fool me once,LTC); but fool me twice: Bear Stearns.
Now we can see the: "It's restricted to wealthy people who can protect themselves" argument now exposed for what it always was: a cynical canard. At least twice in public and only major securites counsels know how many times in private, my government and my money have been used to rescue the clueless managers "too big to fail": my least favorite oxymoron.
Sadly, the government doesn't seem to have the quality people, the will nor the way to regulate hedge funds. Perhaps we ought to criminalize GETTING rescued. Doesn't the coast guard charge recreational boaters for their rescue? Doesn't the mountain climber who risks rescuer life and limb face consequences?
Not so the broker dealer or hedge fund. These scoundrels (some) play with other peoples' money while putting their own in midtown condos that rival Kubla Khan's and then get government handouts that would shame the welfare mother we hear about.
Personal asset forfeiture ought to be among the costs of a bail out (again) from the fed. These guys should be barred from spending more than $50,000. on themselves or their families for the rest of their natural life. If they buy a mansion or acquire one by some coy device they ought to go to jail. I'll let them pass "GO" so they can learn how far $200. goes.
SAy what you want about Eliot: he didn't screw the investor.