Watchdog investigates leveraged hedge funds after massive losses
The Danish Financial Supervisory Authority, Finanstilsynet, is keeping a close eye on hedge funds that invest in mortgage bonds and have recently reported large losses. The gearing of the funds is under scrutiny, the FSA says.
by jørgen rudbeck, translated by catherine brett
When investment funds use leverage, the risk levels unsurprisngly rise -- both for that specific fund, but also for the market as a whole, as this practice reinforces fluctuations.