Hedge Fund Reader : Hedge Funds provide haven for the rich and the fraudulent?

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September 17, 2005

Hedge Funds provide haven for the rich and the fraudulent?

Greed is what keeps a man alive. The more he has the more he wants. And he also understands the principal, Higher the Risk, Higher the Return. So in order to materialize such returns the logical step, one can take is to invest ones earnings in Hedge Funds. Hedge funds deliver phenomenal returns by applying unconventional techniques, such as short-selling, or betting on falling markets to investing across sectors and geographies. Therefore Hedge Funds seam to be rational investment avenue for the wealthy to multiply their returns. And it has been studied that it has also become a shop floor for the rich and the fraudulent. As per the study undertaken by Securities and Exchange Commission (SEC), atleast 51 cases have been reported charging hedge fund advisers who have defrauded investors to the tune of more than $1 billion. However it cannot be denied the role Hedge Funds have played in generating value for the investor, and there are few spoilt eggs in the basket who wants to spoil the entire basket. Courier Post Online Reports:

A growing number of frauds involve hedge funds, which are largely unregulated and traditionally serve institutions and wealthy investors, according to The Associated Press. Hedge funds profit by using unconventional techniques, such as short-selling, or betting on falling markets to make a profit during market downturns.

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September 17, 2005 in Gossip & Scandal, Regulation | Permalink