Treasury outlines toothless hedge-fund rules

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WASHINGTON — With an eye toward shoring up shaky financial markets, Treasury Department officials unveiled a plan Tuesday to provide greater transparency and management of risk in hedge funds.

However, the Bush administration's "best practices" proposal is voluntary, and less than two dozen of the more than 8,000 registered hedge funds signed onto the plan.

Hedge funds are large pools of investment capital owned by the wealthy. They are largely unregulated.

The plan, presented by Treasury Secretary Henry Paulson, doesn't introduce new regulation. It depends instead on self-policing and good behavior by hedge fund managers — two qualities missing in action in recent years as Wall Street excesses have led to what former Federal Reserve Chairman Alan Greenspan recently called the worst global financial crisis since World War II.

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