FSA swings into action on hedge funds

The Financial Services Authority's sudden move to demand greater transparency from hedge funds is very welcome and shows a degree of determination to cast light into the more mysterious corners of the markets that outstrips past reforms. Predictably, it has brought protests in its wake.
At the front of the queue of complainants are the hedge funds themselves who now suddenly face the prospect of having to explain themselves when short-selling stock that is the subject of a rights issue. What do they have to fear? If they have good reasons for doing this – beyond making themselves millions – then I am sure the intelligent people who run these funds will be able to articulate those reasons. If the reasons are threadbare and amount to little more than gambling on the failure of a rights issue then they will be exposed as such. I will be interested in the explanations because I have never quite understood why an institutional fund manager would lend stock to a hedge fund to drive down the price of shares in their portfolio. I always thought that fund managers liked to think they added value to a firm by holding its shares, not destroyed value.
So, there might be an element of protesting too much about the squeals from the hedge funds. The nervousness this pre-emptive FSA strike has induced elsewhere in the market, I understand a little better.
The FSA has always consulted widely before making major changes, almost over-consulted some would say. Does this move herald an era of more aggressive action on the part of the regulator?More of a take it or get out attitude? I don't know but I do know that it is the fear of many in the markets regulated by the FSA that it could be the dawn of a new reform culture down at Canary Wharf with less asking how people would like to be regulated and rather more telling them how they are going to be regulated.