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The quest for a start-up
22 May 2008
Hedge fund investment is down and it's almost impossible to launch a start-up. But that has little to do with the financial crisis. The credit crunch's biggest impact is political, says Maria McGrady.
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hedge funds
start-up
prime brokers
The financial crisis has created problems for many market participants, with banks and investors at the top of the list. But the story for hedge funds is more complicated. They have received a lot of flack, primarily for what is perceived as market manipulation – the spreading of false rumours around the credit of HBOS, Lehman Brothers, Bear Stearns and most banks in Iceland.
While the Bear Stearns rumours were shown to hold some water, many did not. Both the FSA in the UK and regulators in the US have said they will be looking more closely at trading patterns and information around particular price movements. Market manipulation in this form is hard to prove without specific communications as evidence, but hedge funds know they are under scrutiny. This pressure in part led to the voluntary code introduced by the Hedge Fund Working Group in the UK in January.
And to...
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