While doing some research on Google, I recently ran across a article on hedge funds by my friend U Penn bankruptcy law scholar David Skeel in the November 2005 (!) issue of Legal Affairs. Money quote:
Hedge fund misbehavior looks ominously like the edge of the next wave of financial scandals. While many top executives of Enron and WorldCom—and the investment bankers and accountants who advised them—have been punished or soon will be, the scandals they perpetrated never prompted a thorough rethinking of how American markets should work, and how best to preserve the markets' integrity. After 25 years of deregulation in financial, airline, and other industries, a high-velocity, service-oriented economy has given the wealthiest Americans more money than ever. They are pouring it into hedge funds, whose whiz-kid managers are guided by an overriding principle: Multiply the money, any way you can.
I’m not convinced that hedge funds deserve much of the blame for the current financial mess, but Skeel’s essay otherwise looks quite prescient in many respects.
