Exam Focus

The President's Working Group on Financial Markets (PWG) has proposed that participants in the markets for private pools of capital should work with regulators and supervisors, as well as practice self-discipline, to ensure the stability and integrity of financial markets.

One area where PWG feels regulation is justified is in allowing only sophisticated investors to invest in private pools of capital. PWG has provided lists of recommendations for investors, fiduciaries, supervisors, and key creditors and counterparties.

The PWG has set forth a philosophy for participants in the market for private pools of capital. The main point is that in a market-based economy, market discipline of risk taking is the rule, and government regulation is the exception. The PWG set forth this principle in 1999 and has expanded upon it since then.

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