House of Representatives passes hedge funds bill

The US House of Representatives has passed a bill calling for a review of hedge fund regulation.

The Hedge Fund Study Act, sponsored by Democratic representative Michael Castle, would require the President’s working group on financial markets to investigate hedge funds and their recent growth, as well as their associated risks and benefits for the market and investors. It would also examine models of regulation adopted in other countries.

The outcome would be a recommendation on how much information should be publicly disclosed by hedge funds, and the degree of future governmental scrutiny they will face.

The bill comes as regulators across the world take greater interest in hedge funds, spurred by high-profile failures such as the losses at Connecticut-based Amaranth last month.

In June, the US Court of Appeal threw out an attempt by the Securities and Exchange Commission to require hedge funds to register with it. SEC chairman Christopher Cox has since said it will not contest the decision. See: SEC decides not to appeal hedge fund setback