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TESS VIGELAND: The list of victims in the Bernard Madoff Ponzi scheme gets longer by the hour. The Royal Bank of Scotland reportedly had $600 million invested in Madoff's fund. The charity founded by Holocaust survivor and Nobel laureate Elie Wiesel will also take a hit. As will one of Steven Spielberg's charities.
The town of Fairfield, Connecticut, may have just lost $40 million. All this is renewing calls for regulation of hedge funds. But was this a hedge fund?
Marketplace's Jeremy Hobson has the story from New York.
JEREMY HOBSON: Madoff's business was sort of like a hedge fund. It was made up of wealthy investors. But a hedge fund involves pooling investments, and Madoff didn't claim to do that.
Steve Thel teaches securities regulation at Fordham Law School.
Steve Thel: Since he manages individual funds, he has to register as an investment advisor since he has more than 15 funds. And apparently he did so. Hedge funds don't even have to do that.
Now, people have been calling for increased regulation of hedge funds for a long time. Among other things, many hedge funds are based in off-shore tax havens like the Cayman Islands.
THEL: The problem has not been that it was impossible to regulate, the problem has been that the SEC has not actively tried to regulate, and the courts have struck down the few efforts that have been made.
Had there been some oversight, Thel says . . .
THEL: It's likely that any inspector from the government who had looked at this would have probed further.
BILL SINGER: Good regulation confines a fire to the kitchen. Bad regulation burns the building down.
Securities lawyer Bill Singer says while regulation can't stop fraud from occurring, it can help. But he worries an over-reaction from Washington could put the U.S. at a competitive disadvantage.
SINGER: As a poet said, "If a man's reach were not to exceed his grasp, then what's a heaven for?" We have to be careful to avoid that temptation of over-regulating. But quite frankly, that's not going to be a sympathetic argument in this day.
House Financial Services Committee Chairman Barney Frank isn't saying exactly what he has in mind when the new Congress convenes next month. But he says he's not going to apply different rules simply based on what an institution calls itself.
BARNEY FRANK: We will be regulating activity, not institutions.
In New York, I'm Jeremy Hobson for Marketplace.