The House Subcommittee on Capital Markets will schedule at least one hearing to understand how hedge funds affect financial markets and whether they should be regulated, Rep. Michael Oxley (R-OH), and Rep. Richard Baker (R-LA), announced yesterday.

The news comes on the heels of the Securities and Exchange Commission’s announcement yesterday it will hold a roundtable on hedge funds May 14 and 15 ( see MFMN 3/27/03).

Congress is concerned over the explosive growth of hedge funds to more than 7,000 with $600 million in assets today; their impact on the economy, particularly since they are not required to register with the SEC; and whether these are appropriate investments for investors. Once the domain of only the very wealthy, asset management companies have been opening hedge fund-of-funds with minimum balances of as low as $25,000 to appeal to middle-income investors, and it is this extended reach that has Congress concerned.

The hearing will look into whether regulatory steps are needed, Baker said.

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