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What is Obama hedge fund regulation plan main point?
There are a number of different points in the Obama hedge fund regulation plan, but one point which becomes clear quickly is that the impact will affect hedge fund managers and others who previously never had to register. Congress is behind the regulation plan because of the economic downturn caused in part by irresponsible managers and investors. The Obama hedge fund regulation will force hedge fund managers to register as an investment advisor with the SEC. The main point of these new laws and regulations is to protect the economy and the public from unsupervised and unregulated managers, funds, and investments. There are several main goals with the plan that will be implemented to help supervise and provide regulation for the many financial firms that have not been supervised or regulated in the past, and to set up a system of comprehensive supervision as well as the regulation of the financial markets. All OTC derivatives must also be comprehensively regulated, and the customers and investors who use financial firms will be better protected from financial abuse.
In the last few years the financial markets and firms have placed all Americans at a great risk and placed the economy in jeopardy as well. Many financial firms were selling securities and investments as safe options but then turning around and betting for the firm that these investments being sold were going to fail. The main point of the Obama hedge fund regulation plan is to make sure that no financial firm ever places the economy or financial stability at risk again like what happened. Many experts believe that Wall Street and financial firms did not provide enough protection for their investors, and many firms were not honest and up front about their dealings so that the investments looked like a much better choice than they really were. The Obama hedge fund regulation plan also aims to increase the international regulatory standards and foster international cooperation.
The new Obama hedge fund regulation has specific goals, but one main point is to increase the supervision and regulation of hedge funds. Until now these investments and their advisors and managers have been exempt from almost all regulation and oversight, and the economic collapse showed that this put the entire country at very large risks. Under the new laws being considered the SEC would be given the authority to collect data, require registration of managers and advisors for the first time ever, and to examine these funds periodically. Too large to fail was a phrase commonly heard when the bailouts were given, and excessive risk taking by investment firms, banks, and fund managers is blamed for the situation and economic crisis that occurred. The new Obama hedge fund regulation would allow the SEC to analyze and make assessments about whether a fund or family of funds is becoming so large, interconnected, or leveraged that the financial stability of America is compromised, and if this happens the SEC can take steps to prevent it. This regulation is needed to prevent excessive risks which were taken in the past, and that resulted in government bailouts of the same firms which took the risks.
The information supplied in this article is not to be considered as medical advice and is for educational purposes only.
|Hedge Funds Investment26 May 2010|