Crimes and misdemeanours - and how to avoid each when investing in hedge funds
While fraud may not be any more prevalent within the hedge fund industry than in other fields, it tends to take more of the headlines. Harry Davis and Sahar Shirazi from Schulte Roth & Zabel explain the danger signals from frauds past, and give tips on how to avoid, or at least minimise, the chances of being hit by frauds of the future
In the last five years, there has been a spate of high-profile enforcement actions against hedge funds by the SEC as well as other federal and state regulators and even prosecutors.
Indeed, the SEC cited hedge fund fraud as a justification for requiring hedge fund advisors to register with the Commission.1 As with everything else, there is both good news and bad news. The bad news, according to the SEC, is that "[i]n recent years, the Commission has instituted a significant number of actions
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