Investment experts are to appear before an influential MPs' group, following concerns over their role in the market volatility of 2008.
The House of Commons Treasury Committee is to summon four of the leading representatives of the UK's hedge fund industry, for what is anticipated to be tough questioning.
On January 27th, the influential MPs' committee expects to hear from major industry players from firms including BlackRock, Odey Asset Management and Marshall Wace, the Sunday Times reports.
Short selling and other actions from hedge funds have been blamed by some politicians for making the current market volatility and economic downturn worse than it might have been. Short selling as a practice, which sees an investor make a negative bet on the future value of an asset, was even banned last year for bank shares by the Financial Services Authority (FSA).
However, there has been a strong defence of the industry from the fund managers themselves. Speaking anonymously to the newspaper, one said: "Hedge funds have not caused a systemic problem in the economy – it's been caused by the banks. The FSA can ask whether investors were misled about the liquidity of hedge funds, but I can't see what that has got to do with the Treasury."
An unnamed source close to the committee indicated to the newspaper that the questioning would not be a witch-hunt, however. "This is part of a broad-ranging inquiry into the banking crisis, and hedge funds along with banks, credit-rating agencies and many other parties are being invited to give evidence. Hedge funds have not been singled out," they said.
