Relationships matter. That seems to be the approach of securities regulators in London when it comes to hedge funds.
In October, the Financial Services Authority set up a group of half a dozen regulators to monitor the top 25 hedge fund managers who control about 40 percent of the hedge fund assets managed in Britain. The regulators and the fund managers speak fairly regularly, according to people involved in the process, with the goal of establishing a working dialogue.
"We try to develop a good rapport," said David Cliffe, a spokesman for the F.S.A. "We are in close contact, which could mean every day or every week."
Few in the hedge fund business argue for more regulation. But lawyers and hedge fund managers on both sides of the Atlantic seem to agree that the British model — which requires more information and scrutiny upfront and more communication — has distinct advantages over the Securities and Exchange Commission's failed attempt to better understand the booming hedge fund industry.
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