미국의 서브프라임 금융위기와 헤지펀드 규제 동향

Hedge funds are a type of private equity funds. During the U.S. subprime mortgage crisis, big hedge funds with huge loss from the investment to collateralized debt obligations (CDOs) based on residential mortgage-backed securities (RMBSs) were collapsed. Since hedge funds are located in the center of the crisis, there are still debates whether hedge funds were the cause of financial crisis or hedge funds just increased the effects of the subprime financial crisis. The subprime financial crisis was caused by the melting down of the value of subprime mortgage loans and assets. It was triggered by the decreased residential housing value and the increased default rates of loan payments. The collapse of some hedge funds is the result of such changes of housing market. Thus hedge funds are one of the victims of the subprime crisis. After some huge hedge funds were bankrupted or suspended redemption, the market for transactions of RMBSs or CDOs based on RMBSs was almost stopped. This made impossible for the financial institutions heavily engaged in subprime mortgage loans to meet the depositors’ demand when the deposit run happened because they could not sell their loans using RMBSs to make liquidity. Even though hedge funds are not the cause of the crisis, the impact of super huge hedge funds’ collapse was very strong to other financial institutions such as banks. Thus the issue of hedge fund regulation attracted attentions from many commentators after the subprime mortgage crisis. However, there are still pros and cons about the hedge fund regulation. Major issues related to the hedge fund regulation are leverage level, transparency, and fraud by hedge fund. Highly leveraged hedge funds increase the risks as well as the potential of high return. Since hedge funds are investing to the assets with high risk to get high absolute returns, the fund managers must provide to the investors the information regarding the changes of the strategies, valuation, and composition of their portfolio assets with timely basis. If hedge funds’ managers do not provide material information or provide untrue information to the investors about the hedge funds, the investors will receive loss by the fraudulent act. Even though several years before the subprime crisis, there were recommendations by the U.S. President’s Working Group and by the Financial Stability Forum (FSF), respectively, after the Long-Term Capital Management’s collapse, both reports did not recommend direct regulation on hedge funds. Instead they recommended increasing transparency and enforcing counterparties risk management. After the subprime financial crisis, FSF still recommended indirect regulation of the hedge funds even though it added some additional items such as changes in role and uses of credit rating agencies regarding structured products. Recently, the International Organization of Securities Commission (IOSCO) made recommendations regarding possible future IOSCO works in the report on the subprime crisis. It recommended indirect regulations such as increase of transparency in structured finance transactions, improvement of risk management practices and valuation of structured finance products, and increase of quality and integrity of the rating process on structured products by credit rating agencies. Before the subprime crisis, the U.S. Securities and Exchange Commission (SEC) tried to regulate hedge funds by requiring registration using Rule 203(b)(3)-2(Hedge Fund Rule) under Investment Advisors Act of 1940. However, such rule was invalidated by the court decision because it is against the purpose of the Investment Advisors Act of 1940. Nevertheless, SEC introduced alternatively new Rule 207(4)-8 (Anti-fraud Rule) to regulate hedge fund fraud by the investment advisor of the fund. This year SEC filed a civil suit against the managers of two hedge funds operated by Bear Stearns Asset Management, when they was collapsed and incurred huge loss to the investors and the counterparty bank. In the complaint, SEC asserted that the fund managers violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 by giving false information using conference call and mails regarding funds’ problem to the investors and counterparties to persuade not to withdraw their money or to add additional investments. Besides the civil cases filed by SEC, the U.S. attorney’s office in New York also filed a criminal suit against the same two former managers at the same hedge funds of Bear Stearns charging with securities fraud, conspiracy, and wire fraud. The regulation of hedge funds in the U.S is focusing on the hedge fund fraud. There is no direct regulation on hedge funds to regulate high leverage or to require higher transparency. In Korea, recently proposed amendment of the Capital Market and Financial Investment Business Act was introduced by the government to allow hedge funds. However, the investors of such hedge funds are restricted only to the qualified large investors. The level of derivatives products, borrowing and leverage, and guaranty or collateralization by the funds will be restricted by the presidential decree. The structure of regulation of the new Korean law is direct regulation on the operation of hedge funds. This approach is contrary to the U.S. approach. After the subprime crisis, the International Organization of Securities Commission recommended indirect regulation on hedge funds. The U.S. government also maintains indirect regulation on hedge funds and regulates only the hedge fund fraud even after the subprime financial crisis. Increasing direct regulation on hedge funds may be conflict with the essential nature of flexibility of hedge fund industry. To maintain balance between hedge fund regulation and the flexibility of hedge funds' operation, the leverage level and transparency of hedge funds can be regulated between investors and hedge funds by requiring providing important information to investors. The regulation on hedge funds can focus on the activities of credit rating agencies and counterparties of the hedge funds together with the hedge fund fraud.