Stopping short

30 January 2003 By Chris Hughes

Most regulators are softening their stance towards hedge funds. By contrast, the SEC is considering restricting shortselling. Given the outperformance of hedge funds lately, it is not obvious that extra protection is needed.

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The US Securities and Exchange Commission is considering sweeping changes to the way hedge funds operate, The Wall Street Journal reported. Options include forcing more hedge fund mangers to register as investment advisers, restricting who can buy funds, and requiring funds to disclose more information about risk, performance and assets.

An SEC commissioner told CNBC the regulator was considering limiting shortselling and leverage.

The possible moves follow an eightmonth investigation and several hedge fund failures.

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