Glad that U.S. Deputy Attorney General, Patrick McNulty has woken up to smell the (scorched, burnt and basically dried to the bottom of the pot) coffee on the issue of hedge funds.

Not that all hedge funds deserve to be targeted as bad actors. Not in the least. But with tempting promises of high-dollar returns enticing an ever-broader range of investors, a relatively low-threshold for market entry and an even lower level of regulatory oversite, hedge funds have become an easy vehicle for swindlers, charlatans and wishful thinkers. All of which, of course, can wreak havoc on well-intentioned investors.

This is not exactly news, given the more-than-monthly hedge fund flame-outs we've watch take place here at The Daily Caveat over the last two years. The SEC attempted some mild regulation of hedge funds, but their rule was recently thrown out in a court challege. Now Congress is on the case. The special Federal anti-fraud task force headed by McNulty and formed in the wake of the Enron Scandal will now turn its attention to the conduct of hedge funds.

More on McNulty and the plans of the DOJ from Bloomberg.

-- MDT

Labels: Department of Justice, Enron