And I am not all that troubled by the risks. Big banks have imposed new limits on how much they will lend to hedge funds after the Long-Term Capital Management debacle, and they make it far less likely that hedge fund defaults could take down the rest of the system. No, what troubles me is that regulators insist that the funds be secretive and elitist. In a misguided effort to protect small investors, financial regulators have made it very difficult for ordinary folks to have any idea what the hedge funds are doing - or how someone who isn't already in the club might join. It is as if the regulators believe that this form of financial wizardry is just too potent and dangerous for ordinary people to comprehend.
Rich people are usually smart about preserving wealth.
Even as lumpen investors have been sweating out the recent free fall in global markets, some wealthy investors who hedged their risks have continued making a tidy 15 percent. What is galling is that the regulators refuse to let the rest of us in on the secret. The Washington Post.