Hedge funds have been placed under an investigation by international securities regulators, the Financial Times reports. The aim of the investigation is to expose potential risks to hedge-fund investors.

The study done by the International Organization of Securities Commissions (IOSCO) will aim to look at the issue from a different angle. The current studies have focused on the systematic risks posed by hedge-fund growth.

Michael Prada, IOSCO's technical committee chairman, said, "Securities regulators have to step in and make sure [they] have sound systems, rules and practices [in term of] their administration, risk management and fund valuations."

IOSCO says that its investigation reaches out further than the current moves made by national regulators, which state that heavy-handed regulations would drive hedge-funds into offshore centers, and that hedge fund investors should not be protected against the potential risks.

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