GARRY AGUIRRE, the former SEC official who turned whistle-blower when he was fired for mishandling an investigation into allegations of insider trading, believes that hedge funds could cause a market crisis like the crash of 1929.

Mr Aguirre made a series of stinging attacks on the hedge fund industry and the US Securities and Exchange Commission during a hearing before the Senate Judiciary Committee in Washington yesterday.

Mr Aguirre appeared before the committee to reiterate his claims that the SEC, the FBI, the US Justice Department and several key Wall Street figures colluded to stop his inquiry into allegations of insider trading at an influential hedge fund.

However, he also used the occasion to issue a warning to investors. “I believe the nation’s capital markets face a growing risk from unregulated pools of money — now called hedge funds — just as they did in the 1920s from unregulated pools of money — then called syndicates, trusts or pools,” he said.

“Those unregulated pools were instrumental in delivering the 1929 crash.”

Explore Markets

• United States

• Europe

• Japan

• China

• Russia

• The Gulf

• India

• Africa

Times Recommends

• B&B shareholders forced into funding rescue
• John Lewis department store sales plunge 8.3%
• Families turn to credit to cover mortgage bills