Running a hedge fund and mutual fund simultaneously may soon be deemed a conflict of interest by federal regulators. For Vanguard, a company that has stayed clean and stayed near the top during the mutual fund scandal, that could spell trouble, CBS MarketWatch reports.

Although Vanguard itself does not run any hedge funds, the company admitted to the U.S. Senate Banking Committee that many outside firms that run its funds do have hedge funds. The company further admitted that many of those firms, if forced to choose between hedge and mutual funds, would choose hedge funds.

Vanguard would be deeply affected by a ban of joint mutual and hedge fund operations. Of the company’s $730 billion in U.S. assets, $220 billion is managed by 22 outside firms, many of which also manage hedge funds.


The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

The No. 1 fund company, Fidelity, would not be affected by possible legislation against dual hedge/mutual fund management, since the company disallows managers from running hedge funds.

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