Fund Managers Not Dodd-Frank Fans

Date: Wednesday, September 28, 2011
Author: Jing Chen, Hedgefund.net

They may not agree on a lot of things, but the four panelists at the Hedge Fund Association’s Risk and Regulation Symposium last Thursday were in unison about the impact of the Dodd-Frank bill.

“No” was the unanimous answer when asked if the bill is effective in preventing another financial crisis.

The event held at Thomson Reuters' New York headquarters featured Ron Geffner, a partner at hedge fund law firm Sadis and Goldberg; Robert Hegarty, managing director for Thomson Reuters; Robert Colby, chairman and chief investment strategist for New York-based hedge fund Colby Asset Management; and Simon Ruddick, managing director and co-founder at Albourne Partners, the world’s largest hedge fund advisory firm.

Despite the bill’s inception into U.S. law more than a year ago that implements strict financial regulatory reform, many in the hedge fund industry, including some of the panelists, are not convinced it will prevent another financial downfall, which many have blamed on shady business behind closed doors.

“The SEC is doing its job but fund managers will find another way; they’re smart people,” Geffner responded.

“[Fund managers] are players, and steps ahead of the game," Colby said. "I don’t think [the SEC] can pass enough laws to regulate the market. I am a fan of free market and greed and fear runs the market."

The audience, comprised mostly of hedge fund, private equity fund and investment managers agreed. In a live poll conducted at the event, a whopping 93% believes the Dodd-Frank bill will not prevent a future market crash.

“Managers are more careful now. They take the time to review all regulations to avoid any penalties, but this will not cure all problems,” Geffner stated.

The panel then offered their solution.

“A device that works in real-time and a button to press to stop funds when suspicious activity has been detected,” the panel joked.