The Hedge Fund No-See-Ums

They are Wall Street's version of the squee-gee people. And if former Mayor Rudy Giuliani could get the squeegee people off the streets of New York, why can't the U.S. Securities and Exchange Commission sweep their counterparts from the gutters of Wall Street?

This week, we'll look at the SEC's continuing failure to police the lawless new world of e-mail-based investment fraud, in which billions of dollars have been flagrantly stolen from everyday investors while the SEC remains fixated on its pointless pursuit of hobgoblins like the so-called "naked short-seller" menace.

The e-mail spammers of Wall Street are more than just a symbolic challenge to the rule of law in the white-collar world of high finance. Increasingly, they are emerging as a market-moving force in their own right, creating huge, multibillion-dollar market valuations for worthless penny stock companies that in many cases exist as nothing more than corporate shells.

Hedge funds have lately become players in this game as well, scrambling in growing numbers to load up early on the shares of e-mail spam stocks to build the "beat the market" performance numbers they have to show their investors at the end of each quarter.

And since big institutions ranging from banks and insurance companies to corporate and public sector retirement plans are handing over more and more of their assets to be managed by the hedge funds with the best performance numbers, it is easy enough to see how e-mail spam is developing into a whole new dog-wagging tail on Wall Street.

How has the SEC responded? By doing nothing. So what else is new?

http://www.nypost.com/business/sec_no_see_ums_business_christopher_byron.htm