Managed Funds Association Responds to Introduction of 'Hedge Fund Disclosure Act'.

WASHINGTON--(BUSINESS WIRE)--Sept. 23, 1999--

John G. Gaine, president of Managed Funds Association (MFA) said today, "We have made a preliminary review of the "Hedge Fund Disclosure Act" introduced today by Representative Richard H. Baker. MFA has the greatest respect for Representative Baker and commends him for his interest in this area."

MFA has previously testified before the House Banking Committee concerning the issues to which Representative Baker's legislative proposal relates, which arise from the September 1998 events involving Long Term Capital Management (LTCM). MFA continues to believe that the issues presented by LTCM are being addressed through public and private sector initiatives to bolster the risk management practices found to be deficient in the LTCM case. MFA does not believe that the case has been made for creating an elaborate new public reporting system. As we have previously noted and as has been recognized by the President's Working Group on Financial Markets and other important groups who have studied the matter, the LTCM events are attributable to weaknesses in counterparty risk management. These weaknesses would not be remedied by the proposed new public disclosure system and we continue to question the utility of creating still another Washington information "warehouse."

MFA supports the substantial efforts undertaken since LTCM to rectify lax practices, fortify risk management best practices and improve supervisory oversight. We believe that the efforts of public and private sector groups to develop more effective, sophisticated and rigorous risk management practices should be the central focus of regulators and the marketplace in seeking to reduce the potential for future market disruptions. In particular, the Counterparty Risk Management Policy Group Report is a strong industry response. "Daily monitoring of hedge fund positions by lenders and counterparties is the financial systems' best protection against future problems like LTCM," said George Crapple, chairman of Managed Funds Association.

MFA will continue to study Representative Baker's legislative proposal and looks forward to working with him and his colleagues on the House Banking Committee in addressing the public policy concerns raised by LTCM.

MFA is the Association for investment professionals in futures, hedge funds and other alternative investments. MFA has over 700 members and, since its inception in 1991, has provided industry leadership in government relations, communications and public relations. MFA is headquartered in Washington, D.C.