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Regulating Hedge Funds

Ohio State Public Law Working Paper No. 71

Center for Interdisciplinary Law and Policy Studies Working Paper No. 47

33 Pages Posted: 10 Jul 2006  

Dale A. Oesterle

Ohio State University (OSU) - Michael E. Moritz College of Law

Date Written: June 2006

Abstract

This short piece is on the merits of government regulation of hedge funds. The article begins with background information on hedge funds and the current state of their regulation. After sifting through the various reasons advanced for regulating hedge funds, and focusing on three in particular - short selling, leverage and funds of funds, I argue that extensive direct regulation of hedge funds is unnecessary and may harm the country's trading markets. Indeed, the dramatic growth of hedge funds is in part attributable to the current overregulation of registered investment companies. We should, therefore, not tighten the regulation of hedge funds but lighten the regulation of registered investment companies. I also argue, however, that strengthening of some forms of indirect regulation of hedge fund leverage, principally limits on banks that lend to and are counterparties of hedge funds, may make sense.

Keywords: SEC, Securities Act, Securities Exchange Act, Investment Company Act, Investment Advisers Act

JEL Classification: G18, G24, G28, K22

Suggested Citation

Oesterle, Dale A., Regulating Hedge Funds (June 2006). Ohio State Public Law Working Paper No. 71; Center for Interdisciplinary Law and Policy Studies Working Paper No. 47. Available at SSRN: https://ssrn.com/abstract=913045 or http://dx.doi.org/10.2139/ssrn.913045

Dale A. Oesterle (Contact Author)

Ohio State University (OSU) - Michael E. Moritz College of Law ( email )

55 West 12th Avenue
Columbus, OH 43210
United States

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