Spitzer Questions Policing of Hedge Funds

New York Atty. Gen. Eliot Spitzer called the Securities and Exchange Commission’s focus on policing the $800-billion hedge fund industry unnecessary because the funds pose few risks to average investors.

“I’m a little skeptical of the effort to focus so much attention on hedge funds right now,” Spitzer testified before a congressional subcommittee in New York on Tuesday. “I don’t think the notion of regulating hedge funds as a general area should be getting quite as much attention as it has been.”

In September, the SEC staff recommended that managers of hedge funds, which are investment partnerships for institutions and individuals with assets of at least $1 million, be required to register with the agency. After testifying before the subcommittee on government efficiency, Spitzer told reporters that hedge funds are in lesser need of scrutiny because their customers tend to be more knowledgeable about markets than mutual-fund investors.