New hedge fund regulations would hurt underlying beneficiaries, including in Utah

FILE – This September 8, 2020 file photo shows the Charging Bull statue in New York’s financial district. (AP Photo / Mark Lennihan, file)

Our country’s financial system is large and complex, which naturally leads to misconceptions and misunderstandings about how it works. One of the biggest misconceptions concerns hedge funds, a unique but essential part of our economy. Congress needs to understand that hedge funds are an important financial tool for Main Street Americans.

Understanding the complex factors that influence the stock market can be difficult and time consuming, and hedge funds provide busy professionals with an opportunity to invest and diversify. Hedge funds are touted as only benefiting Wall Street when in reality they do some of their most important work for Utah pensions, college endowments, and nonprofits. These organizations use alternative investments like hedge funds to maximize their market portfolios through smart investment strategies. The gains are passed on to the underlying beneficiaries of these organizations: retirees, aspiring students, as well as individuals and communities supported by charitable work. Hedge funds grow this massive investment, and the returns flow to the hard-working retirees in our state, who have earned the right to a secure financial future.

Adding more regulations to US-based hedge funds gives investors more incentive to consider offshore funds, as different managers are setting up offshore funds to avoid US regulations. Yet investors have almost no control over who manages the money and without proper regulation, non-traditional deals can be prone to fraudulent activity due to relaxed regulations at some offshore locations.

US hedge funds are already heavily regulated, existing regulations such as appropriate licensing requirements, background checks, periodic third-party audits, and mandatory reporting protect investors and provide a fair opportunity for financial professionals who comply. these regulations. New requirements would only hurt underlying beneficiaries, including those in Utah. Lawmakers need to recognize that hedge funds operate on Wall Street and deliver for Main Street.

Andy Singh, Salt Lake City

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