All right, you twisted my arm. Safire's misconceptions fall into two broad categories:

1. First, there's the idea that "full disclosure" by hedge funds would somehow combat such already illegal activities as front running, market manipulation, insider trading, and "spreading rumors." But hedge funds couldn't spread rumors, trade on inside information, etc. to any considerable degree without the cooperation of the major investment banks that they all use to clear their trades. There are already rules in place against these practices by the banks; it's just a question of enforcing them. (I should also note that a hedge fund is most likely to be hurt by front running, etc., by its investment banking counterparties, which is why most of them favor stringent enforcement of the existing rules.)

2. Second, there's the idea that the small investor would somehow benefit from increased disclosure by hedge funds. However, any "small" investor (meaning any investor worth less than five million dollars) can only obtain exposure to hedge funds through large institutional investors, such as pension funds or funds of funds. These institutional investors, many of which already have a fiduciary responsibility to invest prudently, have lots of money and clout, and are usually given access to as much information as they need to make a well-informed investment. Hedge funds may not be required to reveal information about their positions or methods, but in practice, they need to provide a lot of information to the institutional money managers who are actually writing the checks. If these large investment advisers aren't giving their clients the information that they need to invest prudently, this isn't the fault of the hedge funds, but a breakdown of the advisory relationship, which already falls under the jurisdiction of the SEC.

Anyway, it just seems that the SEC's time would be better spent by enforcing the existing regulations against mutual funds, for example, where there is an argument that small investors need to be protected.