Economists (Narrowly) Say Hedge Funds Underregulated

By a narrow margin, a majority of a poll of some 40+ WSJ polled private economists thinks hedge funds are under regulated.

The main worry - borrowing and the use of leverage - and its potential spill over effect if another fund goes down in flames.

So there are calls for stricter margin requirements being made. Another area under scrutiny is hedge fund relationships with their broker-dealers.

The counterbalance to more regulation is fear of driving hedge fund business to less regulated locales offshore. Also the SEC suffered a big embarrassment when the courts recently ruled it overstepped its regulatory authority in trying to register hedge fund investment advisers under the '40 Investment Advisers Act.

Given that legislation is often reactive - I am willing to wait for another big blowout (inevitable?)before getting too waxed. After that all bets are off.