A bill before the Connecticut House of Representatives to raise the increase transparency for hedge funds died today. The bill hit the house wastebasket when legislators declined to vote on the measure. The state Senate had already passed the bill, but the “no vote” today, the last day of the legislation session, effectively killed the regulatory measure.
On the heels of disastrous economic consequences, in part due to lack of regulation for hedge funds, anyone would think Connecticut, home of hundreds of the funds and first to initiate regulations on them, would have been first again. The bill would have ensured that investment managers alert investors to any possible conflicts of interest in their dealings.
The legislation would not apply to firms registered with the SEC, as these are required to disclose the information.
Stricter rules on these lightly regulated funds have and should be enacted, but fund managers mostly disagree, and claim that these issues are better dealt with on the national level. Of course, given Washington’s posture, and the administration’s ties with “the hedge fun who’s-who, it is easy to understand why.
This was pretty small news via the Wall Street Journal, and I almost missed it all together. As a piece of a much larger puzzle however, perhaps the reader will be less dumbfounded the next time the largest economy in the world falls on its face. That is all I have to say about this – for now.
Its dumb – as is the recent press release on a similar issue I got from a dumb PR firm Dukas PR.