Hedge Fund Regulation. SEC mission and history SEC/ government interest in hedge funds Systemic risk Regulatory “gaming” Other issues Recent SEC registration decision Bigger questions. Hedge Fund definition revisited. 1940 Investment Company Act exclusion.
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“The Act requires a variety of market participants to register with the Commission, including exchanges, brokers and dealers, transfer agents, and clearing agencies. Registration for these organizations involves filing disclosure documents that are updated on a regular basis.”
William N. Goetzmann
Yale School of Management
Simulated International Stale Price Profits 1990 – 1998Growth in $1 invested in two alternative strategies over the period 1-2-90 through 7-24-98. Buy and hold means equal-weighted investment in 112 Foreign Stock Funds listed on Morningstar. Day-Trading Strategy does not include redemption fees and transactions costs
Buy and Hold
OWEN A. LAMONT
B: Existing owner of KKD
A borrows the stock from B
C: End investor
B sells the stock to C
B rights and off-load financial risk”: Lender
B pays A interest on the collateral: ‘rebate’
A must leave collateral with B equal to 102%
of the market value of the share (additional 50%
if B is a U.S. broker-dealer)
A pays B a fee (netted against the rebate), plus all the dividends paid by KKD
1. The short sales indicator is a dummy variable that equals one whenever short selling is allowed and practiced in a given country and year, and zero otherwise.
2. ADR0 equals 1 if the observation corresponds to dual-listed stocks in countries where short sales are not allowed or not practiced, zero otherwise.
3. ADR1 equals 1 if the observation corresponds to dual-listed stocks in countries where short sales are allowed and practiced, zero otherwise.
Comovement Index: 1990 to 2001 market efficiency on controls, and three dummy variables: