I am doing a research project on political regulation of hedge funds.
This mainly concerns the US, and to a lesser extent other countries.

It's not clear to me whether regulation of hedge funds is a good idea
or a bad idea.  Hence, I am trying to summarize 7 arguments in favor
of regulation, and 7 arguments against.

A 5-star answer would include arguments from both sides, with an
emphasis
on practical effects rather than academic theories. However,
all articles could be helpful (from Journal of Finance to Wall Street
Journal to National Enquirer) if they contain "real world" data or
anecdotes.

I need this information by 4 PM (PST) today.  Sorry for the tight
deadline...

All comments greatly appreciated !
ron

Hello -

Please note: This answer is not finished until you're satisfied with
it. If you need more resources, please ask before rating this answer. 
Thanks for your understanding.

Regulating hedge funds "won’t work"
http://www.magnum.com/hedgefunds/articles/1998/981000hf.asp

Regulating hedge funds
http://www.pbs.org/newshour/bb/business/july-dec98/funds_10-1.html
"ALAN GREENSPAN: So that the question, basically, is can we improve
the system? I'm not sure I know at this stage how in this particular
instance, other than making certain that the technical capabilities of
the banks who lend money to these sophisticated organizations, are up
to the ability of knowing when they're putting monies at risk."

The Perils of Hedge Fund Regulation
http://www.upenn.edu/researchatpenn/article.php?590&bus
"So should hedge funds be regulated? Absolutely not, argue Wharton
faculty members. Not only should funds not be regulated, they say, but
to do so would threaten the core of the industry itself."

Proposals for Reform of Hedge Fund Regulation
://www.google.com/url?sa=U&start=1&q=http://www.law.harvard.edu/programs/PIFS/pdfs/tony_hanlon.pdf&e=6251
Harvard Law School Proposals for Reform of Hedge Fund Regulation

When Hedge Funds Fail, is Regulation the Answer?
http://www.riskandderivatives.com/when_hedge_funds_fail1.htm
"There is a clear and urgent need to reinforce discipline on hedge
funds and ensure that proper due diligence procedures and sound
practices are in place for banks and other institutions that take on
exposures to such funds."

Hedge Funds, Financial Stability a
http://www.rba.gov.au/PublicationsAndResearch/OccasionalPapersAndOtherReports/Hedge_Funds_And_Market_Stability.pdf

http://frontierindia.scriptmania.com/PAGE6V33N13.htm
"There is an urgent need for greater regulation of hedge funds. In
this regard, a beginning could be made by imposing limits on their
borrowings and making it mandatory for hedge funds to provide regular
information about their activities and derivatives positions to not
only creditors and investors but also to the regualtory authorities."

http://www.aar.com.au/pubs/itm/sep02/world.htm
"The Financial Services Authority (FSA) has released a discussion
paper on the regulation of hedge funds in the United Kingdom inviting
comments on the current controls on selling and marketing of hedge
funds and the regulation of UK-based fund managers who manage offshore
hedge funds."

SEC has to start regulating hedge funds [requires free sign-up]
http://cbs.marketwatch.com/news/story.asp?guid=%7B5DC81008%2D11B6%2D42FF%2D825D%2D97BA745D8526%7D&siteid=mktw&

://www.google.com/url?sa=U&start=41&q=http://www.bis.org/review/r990908c.pdf&e=6251
"Directly regulating hedge funds will also not work. There is the
practical problem of regulatory arbitrage such players..."

Progress Towards Better Markets
http://www.asiasociety.org/speeches/levitt.html
"I found as both a regulated entity and as a regulator that
regulations have to be sufficiently flexible to account for changes in
technology and changes in practices. I personally do not favour a
rigid series of rules to try to control hedge fund activities."

Commentary: The Wrong Way to Regulate Hedge Funds
http://www.businessweek.com/2001/01_09/b3721013.htm
"Regulators think they know how to avoid a repeat of the LTCM debacle.
Although they don't regulate hedge funds, they think they can
discipline them through the banks that supply them with credit.
Regulators hope to reduce risk two ways: First, by requiring more
disclosure of risks by banks and their clients. Second, by demanding
the use of risk controls that force leveraged players to sell assets
when prices fall."

The Truth about Hedge Funds
http://www.rjsinvestments.com/locked/general%20information%20on%20hedge%20funds/The%20Truth%20about%20Hedge%20Funds.pdf
"Hence, attempts to regulate hedge funds would have little impact on a
large share of the industtry and would likely cause domestic funds to
relocate offshore."

Tightening the Screws
http://www.investmentadvisor.com/sub_id_sector2/iamag_article.asp?mid=1423
"Man’s Kelly agrees that increased scrutiny of hedge funds by the SEC
will provide “more comfort” to investors and advisors. But Kelly says
he’d be worried if the SEC instituted regulations that would limit
Man’s ability to get fund of funds products to the mass affluent. “If
the big pension funds and endowments, the biggest institutions and
governments around the world, see this as a suitable investment to
diversify their overall portfolios, why is it not good for private
investors?”


Additional Link:
Hedgefund.com
http://www.hedgefund.com

Search Strategy:
"hedge fund regulation"
"hedge fund regulations"
"regulating hedge funds"
"regulate hedge funds"
"policing hedge funds"

Thanks !   ron

You may wish to read the UK regulator's discussion paper on Hedge Funds.
Financial Services Authority http://www.fsa.gov.uk/

http://www.fsa.gov.uk/pubs/discussion/dp16.pdf

answerfinder-ga

And the response from various interested agencies.
http://www.investmentfunds.org.uk/investmentuk/press/2002/20021205-01.pdf
http://www.aimr.com/advocacy/02commltr/02hedgefund_fsa.html
http://www.lawsoc.org.uk/dcs/pdf/companylaw_450.pdf

answerfinder-ga

answerfinder---thank you for taking the time to add comments.  I
appreciate it !  ron

Any fool and his money should realize the risks associated with an
investment in a hedge fund.  A hedge fund should be a real red flag to
anyone with money.  High returns often result in high risk.  There are
situations where high returns can be realized with lower risk through
stock purchases based on a value approach.  But hedge funds by their
nature intuitively describe margin type investing.   Just cannot see
how regulating helps except to say that regultions is required for
people that do not want to be accountable for their own actions and
risk taking.

intelligentinvesting---thank you!  ron