Hedge Fund Fraud and the Public Good

75 Pages Posted: 5 Jan 2010

See all articles by Lydie Pierre Louis

Lydie Pierre Louis

Fordham College of Law; Fordham Law School

Date Written: December 21, 2009


The current financial crisis resonates with every American, regardless of their connection to the securities markets. Many struggle to understand how and why the American financial and securities markets collapsed last year. In essence, why did the regulators fail to prevent the collapse? Government officials continue to analyze the relationship between the structural collapse of the markets and regulators’ limited jurisdiction over a class of entities whose transactions substantially impact the markets: hedge funds. Congress can no longer deny hedge funds’ detrimental impact on the financial and securities markets. The impetus for financial re-regulation has arrived. It is incumbent upon Congress to enact laws which extend the jurisdiction of federal regulators to hedge funds. At a minimum, such supervision is necessary to protect the investing public.

The elusiveness of hedge funds and their investment strategies is of particular concern. Federal regulation may take the form of a registration requirement. Perhaps publicly-traded companies should disclose their transactions with hedge funds. More comprehensive regulatory reform options include the creation of a hybrid regulatory hedge fund governance matrix based upon the dollar volume, frequency of trades and potential losses that hedge funds may experience. It is incumbent upon Congress to create the proper balance between protecting the investing public and maintaining sustainable American financial and securities markets, which in turn stabilizes the global economy.

Suggested Citation

Pierre Louis, Lydie, Hedge Fund Fraud and the Public Good (December 21, 2009). Fordham Journal of Corporate and Financial Law, Vol. 15, No. 21, 2009, Available at SSRN: https://ssrn.com/abstract=1531364 or http://dx.doi.org/10.2139/ssrn.1531364

Lydie Pierre Louis (Contact Author)

Fordham College of Law ( email )

150 West 62 Street
New York, NY 10023
United States

Fordham Law School ( email )

150 West 62 Street
New York, NY 10023
United States

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