British Hedgefunds have balls. GOOD.

[Jim Nickerson]

I believe the English FSA is the equivalent of the US's SEC.

http://www.telegraph.co.uk/money/mai...gefunds121.xml

Hedge funds plan to sue FSA over short-selling ban

By Louise Armitstead

Last Updated: 11:54pm BST 20/09/2008

A group of the world's biggest hedge funds are planning to sue the Financial Services Authority for millions of pounds of losses incurred as a result of the regulator's ban on short-selling last week.

Lawyers are being galvanised on behalf of a raft of hedge funds which claim the financial watchdog has illegitimately extended its powers and caused "wide-spread capital destruction."

One said: "The FSA's remit is to maintain orderly markets - the markets were working fine, only the banks were going bust. With one swoop, the regulators have wiped out perfectly legitimate businesses and have cost some funds millions. They have gone for the big political hit without a thought for the damage they are wreaking. There may be unintended consequences but it's outrageous and illegal."

The backlash follows a week in which the multi-billion pound hedge fund industry has been plunged into crisis. Prime brokers in London estimated that 35 per cent of European hedge funds were organising emergency measures to avoid closing funds as a ban on short-selling has hamstrung managers at a time when they need flexibility to survive.

In the US last week Christopher Cox of the Securities and Exchange Commission said the US regulator was committed to using "every weapon in its arsenal to combat market manipulation that threaten investors and capital markets."

But managers are furious that the regulators have not taken time to introduce more targeted measures. One said: "Short-selling is used for a raft of reasons, not just betting on stocks going down. Sure, there are some evil market manipulators, but this ban has trashed legitimate businesses from options trading, convertible funds and a range of risk management strategies."

Another said: "It's too easy to blame hedge funds. The real culprits are the banks which were cavalier in their lending, and the investment banks which were irresponsible in the way they packaged the loans and pumped them round the world. It's also the regulator's fault for not picking it up, not ours."

One prime broker said the sector was in "absolute chaos"; another said there is "a bloodbath out there."

etc.

[Chris]

Re: British Hedgefunds have balls. GOOD.

Great. Stiffed for more tax liabilities. Will governments ever learn?

Edit: Wasn't this all partly the fault of the FSA who refused to regulate the FIRE economy in the first place?