More Window Dressing

Two weeks ago I wrote about what the Securities and Exchange Commission was doing to regulate the mutual fund industry to help the small investor, the "poor folks". It really added up to zero.

Now the SEC is going to make new regulations for hedge funds to protect the rich folks. And it is more window dressing. In fact, it looks downright stupid. When I say rich folks it is because in order to qualify to invest in a hedge fund you must have assets of one million dollars and income of $200,000 per year for a single person and $300,000 for a couple. With this kind of money you can hire an attorney or financial expert to read the hedge fund document. Furthermore, the major investors in hedge funds are not little investors, but pension plans, endowments and universities that are supposed to be administered by professionals.

The SEC says they want to put in regulations to help prevent fraud. Hey, you guys, what about all the fraud you did NOT find in the regular mutual fund industry? They missed multimillions of fraud in standard "poor folks" mutual funds and now they want regulations to protect the rich folks. All this will do is create more useless expensive jobs in Washington. Every time you hire a new government worker it is the same as putting more tax on everyone, rich and poor.

The Senate Banking Committee voted it in by a 3 to 2 committee decision. Three Democrats for and 2 Republicans against. It is the usual liberal Democrat who wants "feel good" legislation that does no good, but tells the public "we care". Such expensive nonsense.

And how are they going to put this new regulation into effect? More paperwork without question. The funds would be required to hire a Compliance Officer who would write out a set of trading procedures and a code of ethics. Because I have owned a regulated brokerage company I can tell you this is a pile of BS. The new compliance officer is paid by management. He is a toothless tiger. And the SEC will come to do an on-site audit every 2 to 5 years. Because my company was in Florida they did not show up until January or February.

What is most interesting is that there were only 46 hedge fund fraud cases during the past 5 years involving about one billion dollar. In an industry with more than $800 billion in assets this is a spit. Let the rich folks sue and don't burden us "poor" taxpayers.

This new regulation means nothing and is merely a first step for more stringent rules to follow. It is another additional cost of doing business and adds to our taxes.

Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.

Copyright 2005

[email protected]; 1-888-345-7870

In The News:

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Investing in mutual funds? Diversify to reduce risks and enhance returns  Moneycontrol.comIn the worst of the times for stock markets, individuals invested across the asset classes are less hit as compared to investors betting all their money on stocks.
Fund managers' bets: Top 10 large, mid and small-cap stocks that MFs bought in October  Moneycontrol.comMF industry assets grew to Rs 22.2 lakh crore on the back of improved inflows into equity-oriented and liquid funds.
How diversified should a mutual fund be?  LivemintThe extent of diversification is driven by the mutual fund's strategy and the market segment it invests in.
Kotak Mutual Fund is betting on these 5 sectors in 2019  Moneycontrol.comWhile current valuations are not cheap, the fund house expects a further pick-up in earnings.
Benefits of asset allocation in mutual funds  Economic TimesWith macros looking weak and stock market indices at a new high, financial planners believe it is important for investors to follow the principle of asset allocation.
HDFC AMC, Reliance Nippon stocks fall over 9% after Sebi caps expense ratio of mutual funds  Business TodayThe stocks of asset management companies (AMCs) fell in trade today on fears of lower revenues after market regulator Sebi capped expense ratio for mutual ...
Top 10 large, mid and smallcap stocks which fund managers bought & sold in September  Moneycontrol.comFears of a liquidity crunch following the IL&FS crisis hit the mutual fund industry in September. Cash plans, or liquid funds, were the worst hit.
Top 10 mutual funds which can double your wealth in long term  The Financial ExpressMutual funds are one of the most popular and smart ways for investors to build wealth over the long term. One can also double one's money, if planned properly.
How much do mutual fund managers invest in their own schemes?  Moneycontrol.comEver since SEBI mandated mutual fund houses to disclose how much fund managers, directors of the asset management company and other key employees ...

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