Despite industry support of a proposed rule raising the requisite assets investors need to buy into hedge funds, the Securities and Exchange Commission is now questioning whether more regulation may be needed.

"The rulemaking doesn't address the ongoing problem of the rapid growth of hedge funds and the lack of knowledge regulators have," said former SEC Chairman William Donaldson. "It is an increasing concern not only in the United States, but to regulators around the world."

Donaldson said that regulators should zero in on market threats, citing last year's $6.6 billion blow-up of Amaranth Advisors.

(c) 2007 Money Management Executive and SourceMedia, Inc. All Rights Reserved.

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