SEC looking at Hedge funds and Short Selling

We can huff and puff about how unfair it all is, but the fact is the hedge fund community have brought a lot of this on themselves. It is standard practice for some of them to start rumors about their short positions. If they have credible information, I have no problem with them publishing it. I do have a problem with anonymous rumors that are picked up and published as fact by sleazeball "journalists". It's similar but not the same thing as pumping a stock, because the rumors usually involve allegations of wrongdoing. That is a little different than opining that INTC is undervalued.

I have railed time after time against the corruption of Wall Street and the flaccid response of regulators. I think some, maybe all, of the major firms should have gotten the same treatment that Drexel Burnham did. I think it is an outrage that the same CEO's are in charge and only a couple of bankers and analysts have received any sanctions at all. I can't believe Mary Meeker is still at Morgan, or that any retail investor would use that firm. Nevertheless, I don't think the abuses on the long side excuse those on the short side.

I don't see what's so terrible about requiring shorts to file if they exceed a 5% threshold. I think management should have to disclose shorts, offsets and hedges in their own stock. And I think so-called journalists should be required to identify their sources when writing about specific stocks.
 
Quote from North Pesos:



The short have been introduced after the 1929 crash by the SEC (1933 if I remember correctly) as a process for to limit the upside and avoid another crash.
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HUH? (rhetorical question. Please don't explain).

Just know this. Before the Acts of 33 and 34, everything was done. It just was not regulated.

Now back to our regularly scheduled discussion of the misinformed agreeing with or disagreeing with the uninformed.

Sorry for the interruption.
 
The SEC Roundtable on Hedge funds is over. The sessions from the two days are available as an archived webcast on the SEC website.

I just finished listening to the Day 2, Panel 5 session guessing that the issue of short selling would be addressed in that session. I was sort of lucky. It was covered in that session but it's a 2 hour session and it was only during a short period in the beginning and then the final 13 minutes that they really focused in on it. So if you want to just get right to those two areas fast forward about 18 minutes into the session and listen for a few minutes and then go to the 1 hour 47 minute mark and listen to the end for the rest.

I found the whole two hours interesting actually. Sounded like there were an abundance of people at the round table that generally would support views that many of us as traders would have. I know it's a lot to listen to but others may get some interest in hearing from people in our business talk about it.

Here's the link to the archived webcast sessions:

http://www.connectlive.com/events/sechedgefunds/
 
David
good thread. thanks for bringing this up. i basically think that it is not necessarily bad for the market if the SEC gets into this in more depth than it did in the past. it simply reflects the increasing importance of the industry as such.

surely it would be quite nonsense to increase the cost of short selling, by whatever way this is done. i hope and think the SEC is aware of the importance of short sellers. but remember the recent bank research scandal - the same guidelines must be applied to short sellers, who try to push positions.


peace
 
Jim Chanos piece was by far the best. Face it, the man is a genious.

I do not think they will regulate the hedge fund industry much. All the rich wall st guys are in it. They don't want their money maker to disappear. It looks like the only change will be to double the criteria for being accredited. So the rich can keep making money and investing in hedge funds and the poor can be stuck with mutual fund crap.

Figures. Someone, write your congressman. We should open the hedge fund industry to all. Let the mutual fund guys try to compete with us on performance.

Keeping it a fair playing ground means that the best man wins.
 
Quote from praetorian2:

Figures. Someone, write your congressman. We should open the hedge fund industry to all. Let the mutual fund guys try to compete with us on performance.

Keeping it a fair playing ground means that the best man wins.
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I doubt that will happen - Too much vested interest in the Mutual Fund industry as well...

Natalie
 
Quote from praetorian2:

... should open the hedge fund industry to all.
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In fact in the one 2 hour session I listened to many if not all of the invited panelists seemed to be making that exact same point to the SEC people. That the 'hedge' fund industry has been super effective at doing what it does. They talked about many different factors that make hedge funds and funds of hedge funds attractive and worthwhile to people and that the "accredited investor" hurdle is by NO MEANS any measure of being smarter. They seriously called into question why so many possibly good benefits of many hedge funds should be restricted from those in the general population that might have a great benefit for them. In particular it was mentioned many times how the mutual funds have not served the general investor very well over the last 3 years as people's equity has depreciated yet the return for hedge funds has been comparatively stellar over the same period. Also it was pointed out more than once that almost any hedge fund has written into it's agreements a maximum drawdown that would signal closing the fund and returning the remaining capital to investors. The numbers provided here were on the order of 50% give or take. The idea being that if the fund performance truly suffered a self preservation feature would kick in to preserve the remaining capital. It was mentioned repeatedly that many funds from a preservation of capital perspective and risk perspective are much better and less risky than many other investments.

Like I said before. I was very impressed with the quality of the discussion from the representatives of the hedge fund industry and really enjoyed listening. It's a lot to listen to but I hope to make time to listen to some of the other sessions. There's about 16 hours worth!

- David
 
putting more burdens on short sellers will only drive more people to the futures markets. SSf's could really benefit, and it seems they have a bright future regardless. Why buy stock on margin if there is an SSF ? Why short a stock on margin if there is an SSF ?
 
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