U.S. House Financial Services Committee to Hold Hearings on Hedge Funds

This is another (late) step by the US Government to keep up with the changing infrastructure of the financial markets. From CNNMoney.com:

The U.S. House Financial Services Committee said Thursday it will hold a July 11 hearing into systemic risks to the economy and the financial system posed by hedge funds.

Chairman Barney Frank, a Massachusetts Democrat, said in a statement that senior officials from the Federal Reserve, the Treasury Department, the Securities and Exchange Commission and the Commodity Futures Trading Commission are scheduled to testify.

The hearing will focus on efforts to monitor hedge fund risk being carried out by members of the President's Working Group on Financial Markets, an inter-agency committee within the Bush administration.

"The committee is also interested in [the group's] members' perspectives on the growth of the hedge fund industry and the industry's role in the financial markets," the statement said.

. . . . The SEC has made informal inquiries about the Bear Stearns hedge funds, according to people familiar with the matter.

The agency told Congress last week it has opened a dozen investigations into collateralized debt obligations linked to the sinking value of subprime mortgages and created a special working group to look at the issues.

Also last week, hedge fund GLG Partners agreed to pay more than $3.2 million in fines after the SEC found it had earned $2.2 million in illegal profits. The settlement came less than two days after GLG, one of Europe's biggest hedge funds with $12 billion in assets, said it planned to go public in the United States.

On Thursday, the CFTC asked a federal court to hold a hedge fund run by former Chicago Mercantile Exchange Chairman Laurence Rosenberg in contempt for continuing to refuse to turn over information about the fund's customers and investments.

The CFTC has sought the information from Lake Shore Asset Management Ltd and last week had the fund's assets frozen and an order put on it not to destroy any books and records.

Investors are pouring money into the loosely regulated hedge fund industry, with assets topping $1.5 trillion.