Collusion confusion

22 January 2003 By Chris Hughes

The latest swipe at hedge funds that they act in concert to drive down stock prices looks like a long shot. Collusion is a dirty word, but it is not always abusive.

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New York Attorney General Eliot Spitzer and enforcement officers from the US Securities and Exchange Commission have received complaints that hedge funds colluded to drive down share prices in several companies, according to The Wall Street Journal. The companies include MBIA, Federal Agricultural Mortgage and Allied Capital. The alleged collusion involved the simultaneous distribution of negative investment research, posting damaging articles on the Internet and organising hostile questioning during company conference calls.

Meanwhile, an SEC review of hedge fund regulation is drawing to a close. The UK Financial Services Authority has yet to announce the outcome of consultation late last year about the future regulation of hedge funds.

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