Hedge Funds Defend Their Turf

Updated from 3:05 p.m.

The hedge fund industry argued Thursday against charges that its investment strategies cause market upheaval and put small retail investors at a disadvantage.

During a conference held by the Securities and Exchange Commission to help determine whether hedge funds warrant more regulation, panelists argued that the risks present in the market aren't necessarily related to the strategies employed by these funds.

Much of the market volatility comes from individual investors' behavior, the panelists said. Risks, they said, can be mitigated by investor education rather than regulation. Skittish and uninformed investors are more likely to roil the markets than hedge funds are, the panel argued. ...