Monday, 29 October 2007
Is the City dirty?
Amongst all the interesting news today, Oil heading for $100 a barrel and gold heading for $800 a snippet slipped out today.
This article shows that our regulator, recently shown by the Northern Rock scandal to not perhaps be the heroic organisation it once claimed, has some fairly serious reservations about Hedge Funds.
In this case it has reviewed them and found that many lack any serious controls to prevent market abuse. Given the huge power of these funds to short-sell shares and decide on the success or failure of merger and acquisitions this is a serious accusation.
More than that it adds to the study already done that showed up to 25% of M&A deals had some dodgy looking share deals associated with them in the past few years.
All this leaves a rather nasty taste in the mouth (this phrase always reminds me of rhubarb crumble, but I digress). how are the small retail investors to prosper when the big boys are keen on large stitch ups and how are we to judge funds success when they may have been cheating the market rather than playing fair?
All in all a difficult situation and deserving of more headlines and action than many of the other stories of the day. Certainly more important than the Government interfering in the workings of the mortgage market.
Posted by CityUnslicker