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Byline: Sara Hansard
WASHINGTON - Financial planners who invest client assets in hedge funds are bracing for more calls for regulation as a result of the well-publicized collapse of Bayou Management LLC.
Indeed, an official at the Securities and Exchange Commission was quick to use Bayou, which is the subject of investigation by a number of regulatory and law enforcement agencies, as evidence of the wisdom of former Chairman William Donaldson's decision to push through hedge fund registration requirements over strenuous opposition.
"We're paying very close attention to this to evaluate what went wrong, why it went wrong and to what extent there are implications for policy,'' said Robert Plaze, associate director of the SEC's division of investment management.
The case "raises interesting questions about the distribution of hedge funds and consultants, and their interests,'' he added. "We need some oversight here.''
The SEC currently is being sued over its 2004 rule requiring …
Source: HighBeam Research, Bayou collapse sends a warning signal; Latest sign that hedge funds...