Wednesday, 23 July 2014
Last updated 8 hours ago
Mar 7 2007 | 1:15pm ET
A pair of regulators assured attendees at the World Hedge Fund Conference yesterday that regulation of the industry is not in the cards, however, an angry Richard Blumenthal, attorney general for the Nutmeg state, blasted the forum for not making the topic of regulation more central to the event.
“I don’t think that anyone here wants us to impose heavy-handed regulations,” said Ralph Lambiase, who heads the securities and investment division of the Connecticut Department of Banking. He added that that drive toward hedge fund regulation is the result of emotion, rather than common sense, and argued that the focus should be on fraud, which he said causes most hedge fund trouble.
Representing the federal level, Anthony Ryan, assistant Treasury secretary for financial markets, read a prepared speech to the luncheon crowd at the forum, which was sponsored by the Connecticut Hedge Fund Association.
“The combination of market discipline and existing regulatory authorities are well positioned to protect investors,” said Ryan.
On the outside looking in, in a sense, Blumenthal was reportedly invited to the conference, which took place in Greenwich, Conn., only at the last minute. He sent a letter to CHFA President Bruce McGuire, chastising the group for failing to include a discussion of regulation on its agenda.
“Unfortunately, it will be a missed opportunity for promising discussion and debate about proposed measures that would provide greater transparency and accountability in the hedge fund industry,” he wrote. “Such views seem to have been neglected, even excluded, from your program.”
Blumenthal did not attend the program, though he did attend the reception the evening before the event.
Roubini Predicts Doom And Gloom
Meanwhile, more interesting than the hot-button issue of regulation was the final panel discussion, in which well-known economist Nouriel Roubini painted a less-than-rosy picture of the economy.
“The U.S. will experience a hard landing,” he said, “most likely, an outright recession.” He added that the housing sector is nowhere near bottoming out, and that he predicts it will become much worse next year.
“Don’t be fooled, it’s not just sub-prime,” he said, referring to the mortgage space that has been under pressure lately. He added that there is a massive credit crunch, and that the Federal Reserve will not be able to come to the rescue.
Speaking on the same panel, Dan Gressel, president of hedge fund Teleos Asset Management, was more upbeat.
“I don’t have a recession going until 2010,” said Gressel.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…