Hedge funds

The rise in hedge funds and their assets has become particularly notable since the market downturn in 2001, as these funds can help investors navigate volatile or declining stock markets. However, despite the term "hedge," they often do not provide a safe risk hedge, relying instead on skill-based investment strategies and speculative instruments. For years, hedge funds received little specific legislative attention in major markets like Germany and the United States. In response to growing international regulatory concerns, the Institute for Law and Finance (ILF) collaborated with Deutsches Aktieninstitut e. V. (DAI) to gather experts to evaluate the risks, opportunities, and regulatory challenges posed by hedge funds. This dialogue coincided with discussions among German lawmakers regarding new legislation, culminating in the German Investment-Modernization Act, effective January 1, 2004, which enhanced the appeal of hedge fund products in Germany. This volume documents the ILF/DAI May 2003 conference titled "Hedge Funds: Risks and Regulation," featuring papers that analyze the economic characteristics and regulatory strategies for hedge funds. Key contributions include insights on the economic reality of hedge funds, tailored regulatory approaches for financial stability and investor protection, and an overview of regulatory frameworks in the U.S., U.K., and Germany, concluding with an examination of corporate structures us