45 San Diego L. Rev. 989 (2008)
In Search of Market Discipline: The Case for Indirect Hedge Fund Regulation

handle is hein.journals/sanlr45 and id is 997 raw text is: 11/25/2008 2:00 33 PM

In Search of Market Discipline: The Case
for Indirect Hedge Fund Regulation
PAUL M. JONNA*
TABLE OF CONTENTS
IN TR O D U C T IO N   ...............................................................................................................  9 9 0
I.      HEDGE FuNDs, DIRECT REGULATION, AND MARKET IMPLICATIONS ................... 996
A .  H edg e  F und  B asics  .................................................................................. 996
B.   The Failure of Direct Regulation of Hedge Funds ................................... 997
1.  The  Investm ent Company  A ct ............................................................ 998
2.  The Investment Advisers Act of  1940  ................................................ 999
a .  G oldstein   v .  SE C   ....................................................................... 999
C.   The  Failure  of  the  Free M arket .............................................................. 1000
1.  Long  Tenn  Capital M anagem ent .................................................... 1000
2. The Subprime Mortgage Meltdown and Ensuing
H edge  F und  Implosions  .................................................................. 1001
3.  Retailization  of  H edge  Funds .......................................................... 1007
4.  Increase in Growth and Increase in Fraud ..................................... 1008
* University of San Diego School of Law, J.D. expected 2009; University of
Southern California, B.S., Business Administration, 2005. I am grateful to Professor Frank
Partnoy for his substantial feedback, inspiration, and support throughout the drafting of
this Comment, as well as Professor James C. Krause for his unwavering guidance and
encouragement. I would also like to thank the staff and editorial board of San Diego
Law Review for the opportunity to publish and the skillful edits that helped make this
Comment publishable. This Comment is dedicated to my family: to my Dad, for being
my role model; to my Mom, for her love and inspiration; to my brother Peter, for all of
his advice; and most especially, to my wife Rena, without whose support, patience, and
feedback this Comment could not have been written. All errors are my own.

JONNA.PRINTER.DOC

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