Speaking at the Securities Industry Association’s conference in New York Monday, Rep. Richard Baker (R-La.) said the minimum investment for hedge funds-of-funds should be raised to protect unsophisticated investors, Dow Jones reports.
Most hedge funds-of-funds have minimum investments of as little as $25,000, which Baker called dangerously low. The Securities and Exchange Commission requires hedge fund investors to have a minimum of $1 million in investable assets, he noted.
“When the sharks start feeding on minnows, you’re in trouble,” said Baker, who is the chairman of the House Financial Services Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprises. “The size of the minnow population has expanded dramatically.”