Connecticut official blasts hedge fund proposal

NEW YORK (Reuters) - Connecticut Attorney General Richard Blumenthal, who has long demanded stricter oversight for hedge funds, on Tuesday called the U.S. Treasury's new industry proposals "meaningless" because they would be voluntary.

"This plan is one small step when giant strides are needed," Blumenthal said in a statement. "The Treasury Department's proposals for greater transparency and risk disclosure must be mandatory or they are meaningless."

Blumenthal, whose state is home to roughly one third of the world's estimated 9,000 hedge funds, has long criticized the Bush administration for doing too little to protect investors at a time when ever more pension funds are putting retirees' money into these loosely regulated portfolios.

"Nonbinding best practices or voluntary guidelines are an imaginary fence and virtual farce. They stop nothing," he said in a statement.

He warned that hedge funds, which currently manage roughly $1.8 trillion, are "too big and too important to remain outside the rules. Suggesting hedge funds do the right thing is not enough."

(Reporting by Dane Hamilton and Svea Herbst-Bayliss; editing by John Wallace and Gerald E. McCormick)