Hedge funds are fast approaching the $1 trillion mark and a lower level of investor, while growing increasingly influential and potentially disruptive in the capital markets, SEC chairman William Donaldson told the Senate Banking Committee on Thursday.

Just one day after announcing that the SEC has voted 3-2 in favor of proposing a rule that would require hedge funds to registered with the agency, Donaldson told the country’s lawmakers that through the use of leverage and the deployment of rapid trading strategies, hedge funds can have a disproportionate impact on both large and small investors.

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