International Regulators Warn Hedge-Fund Investors About Risks

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.