November 12, 2008 / 5:44 AM / 9 years ago

Billion-dollar hedge fund managers face hearing- FT

Nov 12 (Reuters) - Hedge fund managers who earned more than $1 billion last year, including George Soros and Philip Falcone, are being summoned to Capitol Hill on Thursday to testify under oath about potential risks their firms pose to the broader economy, the Financial Times said.

The hearing before the House oversight committee will be headed by Democrat Henry Waxman, the paper said.

Soros and Falcone will appear alongside John Paulson of Paulson & Co, James Simons of Renaissance Technologies Corp and Kenneth Griffin of Citadel Investment Group, the paper said.

The five hedge fund managers were chosen because they were the top earners, according to a rough calculation from Alpha magazine, the FT said, citing people familiar with the matter.

The fund managers could not be immediately reached for comment by Reuters.

Hedge fund executives expect the hearing will focus on questions including whether hedge funds have become so large that they threaten the stability of the financial system, either because of the impact of their trading or because of the impact of the failure of even one big hedge fund, the FT said.

A subsidiary question in this regard is whether hedge fund compensation practices encourage reckless risk taking, according to the paper.

Alpha publishes a list of the most highly compensated managers and executives ever year, the paper said adding that many dispute the accuracy of the figures.

Another issue expected to be discussed will be short selling, the paper said.

Hedge fund managers and consultants told the FT the hearings may be a prelude to stiffer regulations.

The paper said the committee said the managers had co-operated with a long list of requests for documents.

Documents requested included e-mails detailing the level of risk associated with each hedge fund, the value of their positions in mortgage-backed securities, the likelihood of the fund’s collapse and the compensation and tax treatment of pay received by top managers, according to the paper.

The committee made clear it had not yet reached a decision on whether it would release all the data it had been given publicly, the paper said. (Reporting by Ajay Kamalakaran in Bangalore; Editing by Anshuman Daga)

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