Somebody has got to do something about hedge funds rigging the financial system and exploiting the U.S. consumer, and Democratic Congresswoman Nydia Velazquez (New York) says she is the woman for the job.

When Velazquez introduced a bill in the U.S. House earlier this week to force greater hedge fund disclosure, she said the bill was partly motivated by the current fiscal crisis in Puerto Rico, which is trying to come to terms with a very high debt load. Hedge funds and others who own Puerto Rico bonds have already been negotiating with PR officials regarding debt restructuring and additional budget cutting measures. ValueWalk first reported the proposal.

Velazquez Bill Hedge Fund Disclosure Puerto Rico
Velazquez Bill and Puerto Rico

Velazquez Bill – Statement from Rep. Velazquez

“It has become increasingly clear that hedge funds, which have purchased a sizeable part of Puerto Rico’s debt, are exacerbating the crisis and profiting from the island’s misery,” Velázquez pointed out. “This bill will allow regulators and the public to see exactly what role these funds are playing in Puerto Rico’s financial crisis and in our broader economy.”

“Rather than working to help resolve Puerto Rico’s financial crisis in a fair, orderly fashion, these funds are lobbying to cut basic services that 3.5 million American citizens in Puerto Rico rely upon,” Velázquez continued. “It is time we take a clear-eyed look at the effect these funds are having on Puerto Rico and on other parts of our nation’s economy.”

Details on the Velazquez bill forcing hedge fund disclosure

The new bill would require hedge funds to disclose positions where they own more than 1% of a firms stock within five days, instead of the current requirement of 5% within 10 days. It would also require hedge funds to disclose investments of a 1% or greater stake in stocks or corporate/municipal bonds on a quarterly basis.

Labor organizations such as the AFL-CIO and the American Federation of State, County and Municipal Employees support the Velazquez bill, officially named the Hedge Fund Sunshine Act of 2015.

Hedge Clippers, a nonprofit progressive org that looks to “expose the mechanisms hedge funds and billionaires use to influence government and politics,” also supports the Velazquez bill.

The Velazquez Bill was introduced in the House of Representatives and will likely be referred to the House Financial Services Committee. Political analysts point out that the bill is likely to face stiff opposition in the Republican-controlled house.

Hedge funds are strongly opposed to the bill as more frequent disclosures of smaller stakes will probably make more difficult and costly for hedge fund managers to build  positions. Moreover, greater disclosure means other investors will know sooner when a manager is leveraging up a position, leading to the price of targeted assets rising and making copy-cat investing easier.

Sources  told ValueWalk the bill would apply only to hedge funds (no matter what size), long positions, CDS, even for an investor who has no intention of activism and only files a 13G, and not to short positions.

Puerto Rico Velazquez Bill
Velazquez Bill