Galvin Hits Hedge Funds For 'Disruptive Effect'

Jan 3 2007 | 12:58pm ET

With Eliot Spitzer now safely ensconced in New York’s governor’s mansion, Massachusetts Secretary of State William Galvin laid his claim to succeed the former Empire State attorney general as the “sheriff of Wall Street.” And his target, unsurprisingly, is the hedge fund industry.

According to news reports this week, Galvin’s office has launched a probe into “hedge fund hotels,” specifically UBS’ practice of leasing office space to hedge fund traders to lure their business. UBS said it is cooperating in the investigation, which seeks to determine if hedge funds are paying more in trading fees to compensate UBS for the office space and other services, a practice that might lead to increased management fees.

But Galvin, who has excoriated his state’s public pension funds for investing in hedge funds and called for stricter limits on investors in hedge funds, said his crusade doesn’t stop at the hotel’s front door. “The bigger issue is, what is to be the role of hedge funds in the financial system?” he said in a Boston Globe interview. “Hedge funds are like the jet stream that affects all the other weather, and can have a disruptive effect at a time when we’re saying to most investors… ‘you’re on your own.’”


In Depth

U.S. Treasury Moves on Reinsurance Loophole

Apr 24 2015 | 5:11pm ET

The U.S. Treasury Department has released proposed rules aimed at limiting the ability...

Lifestyle

Puerto Rico Woos The Rich But So Far Gains Little

Apr 17 2015 | 2:45am ET

Hedge fund manager Rob Rill grins. He has just had word that U.S. financial regulators...

Guest Contributor

Opportunities Ahead: Asian Fixed Income and Currency Markets

Apr 24 2015 | 6:18am ET

For hedge funds focusing on Asia, the policy uncertainty, unclear interest rate...

 

Editor's Note