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WASHINGTON, March 7 Legislation requiring hedge
funds to register with the U.S. Securities and Exchange
Commission was introduced on Wednesday by Sen. Charles
Grassley, the senior Republican on the Senate Finance
The Iowa senator said it was up to Congress to act because
a federal court of appeals last year overturned an SEC
regulation requiring hedge funds to register with the agency.
"My amendment gives Congress a good opportunity to say
there should be greater transparency with hedge funds,"
Grassley said in a statement.
Hedge funds have rapidly grown in recent years and now have
an estimated $1.5 trillion in total assets.
Grassley filed the legislation as an amendment to an
unrelated homeland security bill now being debated by the
"The secretive way that hedge funds operate might not be an
issue for the super rich who first invested in hedge funds, but
today the average Joe has a stake as pension funds are invested
in hedge funds," Grassley said. "Right now a hedge fund isn't
required to report even basic information about who runs the
Hedge funds invest in ways not available to more
traditional mutual funds, such as selling short and taking
derivative positions, in pursuit of above-market returns.
The Bush administration last month said it saw no immediate
risks with the fast-growing hedge fund industry and that market
discipline and risk awareness were the best way to protect
investors from any problems with the huge pools of capital.
The President's Working Group on Financial Markets, which
is led by the U.S. Treasury Department, said there was no need
to impose new regulations on the hedge fund industry.
In September 2006, Amaranth Advisors LLC lost $6.4 billion
on a series of bad bets in the natural gas market, prompting
renewed calls for tougher regulation of hedge funds.