A bill requiring hedge funds to disclose their holdings more frequently was introduced in Congress on Wednesday, a move that if signed into law would represent a seismic change for the hedge-fund industry. It doesn't come to much of a surprise, as financial institutions have made a huge shift towards being more transparent so why not include hedge funds as well? The outcome of this bill, will allow other investors early insights into the stocks or bonds the manager is looking to purchase, which would likely cause price fluctuations.
The measure would require hedge funds to disclose positions where they own 1% or greater of a company’s stock within five days, compared with the current requirement of 5% within 10 days. The bill would also create a new requirement for hedge funds to disclose investments with a 1% or greater stake—in either stocks or corporate and municipal bonds—every quarter. Labor groups like the AFL-CIO and the American Federation of State, County and Municipal Employees are supporting the bill, called the Hedge Fund Sunshine Act of 2015, according to Ms. Velazquez’s office. Another supporter is Hedge Clippers, a group that seeks to “expose the mechanisms hedge funds and billionaires use to influence government and politics,” according to its website.