Hedge Funds

Donaldson raises specter of fraud in rationale for registration


U.S. Securities and Exchange Commission Chairman William Donaldson suggested in a speech on May 12 that the current competition for profitable trades among hedge funds and the resulting poor performance is making registration of hedge fund managers as investment advisors all the more timely.

The registration requirement is set to go into effect in February 2006.

"Every week seems to bring another article in the press about the crowding of hedge funds into similar investment strategies and the difficulty this poses in producing market-beating returns," Donaldson said in a speech before the Foundation Financial Officers Group in Washington,