Monday, 2 February 2009

US and UK oceans apart on regulation

Hedge fund managers based in London feel vastly superior to their US counterparts when it comes to the standards they are held to. For a start, they are regulated. The Financial Services Authority, the UK regulator, treats hedge fund managers the same way as other asset managers. There is no escaping its oversight.

The funds they run are mostly based offshore and so escape the UK regulatory net, but that is a minor issue, according to the managers called to account for their industry in front of the UK Parliament’s Treasury select committee last week.

They were keen to point out the differences between the US and UK approaches to regulation of hedge funds, particularly in the light of the Madoff affair. The UK regime had been much more successful in preventing fraud than other regimes, said Douglas Shaw, managing director at BlackRock, when asked if a fraud such as Bernard Madoff is alleged to have perpetrated could happen in the UK.

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