New Ontario Securities Commission Chairman W. David Wilson recently gave a speech in which he highlighted that the recent scandals involving hedge funds and said there is a need for more transparency, and by extension, more regulation, according to Hedge World News.

"Given the increased prominence of hedge funds in the Canadian marketplace, we must consider measures designed to ensure that hedge fund managers provide fair, full, accurate and timely information to their investing clients," Wilson said. "And we must consider the steps we should take to improve transparency regarding fees and risks within the often complex provisions of their financial maze. Today such regulation is a new frontier."

His comments came as a result of alleged fraud at Portus Alternative Asset Management and Norshield Financial Group, two Canadian hedge funds that crumbled due to the outbreak of scandal. Portus improperly offered shares to non-qualified investors, and at the same time paid brokers to recommend it as an investment.

Norshield ran into similar problems earlier in the year as well, and has only promised that investors would get back a nominal amount of the money they invested in the fund.

"Recent scandals have placed the spotlight on this new industry, and the need for greater transparency," Wilson said. "Hedge fund managers have become one of the most important providers of liquidity in capital markets and one of the strongest drivers of market efficiency--globally and in Canada," he added.

Wilson placed emphasis on regulation, yet implied that actions taken by the U.S. Securities and Exchange Commission are a step towards over-regulation.

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