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GEORGE SOROS TO FACE CONGRESS OVER ROLE IN HEDGE FUNDS MELTDOWN

 
acolyte
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11/17/2008 02:45 AM
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GEORGE SOROS TO FACE CONGRESS OVER ROLE IN HEDGE FUNDS MELTDOWN
[link to www.telegraph.co.uk]

Soros faces Congress over hedge funds' role in meltdown
Published on 16-11-2008

Five of the world's richest hedge fund managers, including George Soros, the man who the broke the Bank of England, have been called to account by US politicians for their role in the collapse of the global financial system.

Soros faces Congress over hedge funds' role in meltdown

The quintet including John Paulson, who made $3.7bn (£2.49bn) last year betting against the US mortgage market were grilled over their roles in buying unregulated derivatives products, which some politicians believe contributed to the financial markets' meltdown.

The men, who each earned more than $1bn each last year, were called to account by Democratic Congressman Henry Waxman, who chairs the House committee on oversight and government reform.

The committee, which is investigating whether hedge funds should be more heavily regulated, is concerned that the funds were able to profit from the collapse of some of the US's largest financial institutions.

"Hedge funds are virtually unregulated," Mr Waxman said. "They are not required to report information on their holdings, their leverage, or their strategies. Regulators aren't even certain how many hedge funds exist or how much money they control."

Mr Soros, best known for his $1bn bet against sterling in 1992 which forced Britain to leave the European Exchange Rate Mechanism, argued for measured regulation of hedge funds, predicting 50pc-75pc of the industry will disappear in the coming months in any case as a result of the financial crisis.

At least one of those hedge fund managers present Ken Griffin from Citadel Investment Group is already having a hard time of it as two Citadel funds are down by more than 30pc in the year to date. The other two fund managers questioned were Philip Falcone of Harbinger Capital and James Simons of Renaissance Technologies.

Mr Soros stopped short of placing total blame for the crisis on hedge funds, but he admitted that the funds had been an integral part of the financial market bubble which had now burst. He added: "A deep recession is now inevitable and the possibility of a depression cannot be ruled out."

However, he Mr Soros said blame for the crisis should also be borne by US financial regulators and the Federal Reserve for allowing the bubble to occur and called for regulation of financial engineering to be a high priority.

The US hearing came as European hedge fund Gottex felt the pressure and suspended redemptions in an attempt to stem the flood of money being withdrawn by investors.

Gottex Fund Management, the Swiss-listed group that at its peak had over $15bn (£10bn) invested in hedge funds around the world, said the measures were "to protect value for its fund investors".

The move followed demands by investors to withdraw the equivalent of 11pc of assets under management in the past three months, on top of a fall in the assets value of 14pc in the previous quarter.

Experts say hedge fund of fund groups around the world are scrambling to impose similar measures amid concerns that the industry is facing decimation as panicked investors demand their money back.

Between July and September, investors pulled out a record $31bn from hedge funds, which helped shrink the industry 11pc to $1,700bn, according to Hedge Fund Research.

Hedge funds' assets lost $100bn in value in October alone because of plummeting stock markets and mass redemptions, according to the latest figures by Eurekahedge.

One hedge fund of fund manager said: "A month or so ago, investors were almost in disbelief, now they just don't want to listen to explanations or arguments, they want their money back."

He added: "Redemptions have got worse as the year-end nears - investors would rather take the losses they can see now than risk losing any more before the end of the year. It's causing mayhem."

In a statement released yesterday, Gottex said: "The temporary suspensions are driven by market illiquidity, credit tightening and adverse foreign currency movements affecting underlying funds in which Gottex funds are invested and reflect conditions prevailing across the hedge fund industry."

At the end of September, Gottex had $13.5bn of assets under management invested with more than 165 hedge fund managers around the world.
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Anonymous Coward
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11/17/2008 03:12 AM
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Re: GEORGE SOROS TO FACE CONGRESS OVER ROLE IN HEDGE FUNDS MELTDOWN
Did i get this wrong or did Soros say 75 % of all hedge funds will disappear within a few months?...

If so, 'Doom' is not even the right word to describe what's going to happen...
Bluebird

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11/17/2008 03:20 AM
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Re: GEORGE SOROS TO FACE CONGRESS OVER ROLE IN HEDGE FUNDS MELTDOWN
bump
One of the most important aspects of conspiracy theories is being able to discern when there isn't one.

Oh yeah, like you'd understand anyway.

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acolyte nli (OP)
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South Africa
11/17/2008 01:24 PM
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Re: GEORGE SOROS TO FACE CONGRESS OVER ROLE IN HEDGE FUNDS MELTDOWN
Did i get this wrong or did Soros say 75 % of all hedge funds will disappear within a few months?...

If so, 'Doom' is not even the right word to describe what's going to happen...
 Quoting: Anonymous Coward 486875


"Econopocalypse"
Anonymous Coward
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11/17/2008 01:28 PM
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Re: GEORGE SOROS TO FACE CONGRESS OVER ROLE IN HEDGE FUNDS MELTDOWN
So the Obama puppet master gets to go to lie to/with Congress. Yawn.
Kanigo2

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11/17/2008 01:28 PM
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Re: GEORGE SOROS TO FACE CONGRESS OVER ROLE IN HEDGE FUNDS MELTDOWN
Did i get this wrong or did Soros say 75 % of all hedge funds will disappear within a few months?...

If so, 'Doom' is not even the right word to describe what's going to happen...
 Quoting: Anonymous Coward 486875


They have 43 days to finish making the "redemption's" in the meantime--the ones that havent payed yet- will have the rates on their loans increased and we will find who should not have been in business.
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