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Hedge Funds Headed for State Regulations?

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Speaking of that Judiciary Committee hearing, this has to be the least persuasive argument for federal regulation we've ever heard.

The U.S. government needs to step in and regulate the $1.2 trillion hedge-fund industry or states will ``join forces'' and oversee the private investment pools, the attorney general of Connecticut told senators.
``Right now hedge funds are in a regulatory void,'' the attorney general, Richard Blumenthal, said today at a Senate Judiciary Committee hearing in Washington. Federal ``inertia'' on hedge funds ``will invite state action.''

Next thing you know we'll have some sort of quirky federal system, with states making their own crazy rules. Who knows what will happen? Delaware might start making up it's own corporate law, New York could have an attorney general enforcing his own state's financial regulations.
That said, we totally loved Blumenthal in "LA Confidential."

States May Fill `Void' on Hedge-Fund Oversight, Blumenthal Says