Hedge Funds

Term Paper # 105130

Business > Finance, Investment and Banking
Economics

Hedge Funds

This paper discusses hedge funds and the regulation of insider trading.

1,769 words () | 7 sources | MLA | 2008 United States

Paper Summary:

The paper explains the concept of hedge funds and describes their legal structure, fee structure and classification. The paper discusses how, before the regulation of hedge funds, managers could bypass laws related to insider trading and use practices that would not be tolerable in other investment arenas. The paper looks at the "Goldstein vs. Securities and Exchange Commission" (SEC) case and its outcome that has improved the regulatory framework of the SEC.

Outline:
Introduction: What Is a Hedge Fund?
Legal and Fee Structure of Hedge Funds - Platform for Insider Trading
Regulating Hedge Funds

From the Paper:

"The original concept of a hedge fund is that it offer plays against the market, using short-selling, futures and other derivative products. Hedge funds provide one of the most diversified market activities within investment strategies since it can use a myriad of financial instruments and positions to reduce risk and maximize gains . Hedge funds minimize risk and the volatility of that risk via strategic diversification by selling long or short, buying and selling securities, engaging in opportunities on the futures or bond market. The development of a hedge fund was based on getting an absolute return in all directions. In practice this means that hedge fund managers seek seed freedom to achieve high absolute returns and wish to be rewarded for their performance."

Sample of Sources Used:

Cantrell, Amanda. "Government Catches up with Hedge Funds". CNNMoney.com. February 1, 2006.http://money.cnn.com/2006/02/01/markets/hedge_registration/
Cox, Christopher. "Testimony Concerning the Regulation of Hedge Funds: Before the Senate Committee on Banking, Housing and Urban Affairs". U.S. Securities and Exchange Commission. July 25, 2006. http://www.sec.gov/news/testimony/2006/ts072506cc.htm.
Hanusk, Thomas, Justin Murphy, and Williams O'Connor. "SEC Ramps up Hedge Fund Enforcement". White Collar Alert. August 3, 2007. http://www.crowell.com/NewsEvents/Newsletter.aspx?id=494
"Hedge Funds under Scrutiny: A Squeeze on Both Sides of the Atlantic". Client Alert. October 2006. http://www.brownrudnick.com/nr/pdf/alerts/Brown_Rudnick_Client_Alert_-_Hedge_Funds_10-06_US_version.pdf
"Long-Term Capital Investment." Wikipedia. http://en.wikipedia.org/wiki/Long-Term_Capital_Management