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Hedge Fund

Losses and Penalties Overview

Losses and Penalties Overview

Those hedge funds guilty of financial fraud are subjected to liability on a criminal level. Other losses include court fees, restitution, legal counsel fees, penalties, and initial losses acquired from the fraud itself. Monetary losses are only the first type of loss that individuals guilty of financial fraud experience.
 
 
The second type is reputation losses, that result from deceit and misconduct. Individuals that are accused of financial fraud often have to answer to the masses. Since a hedge fund usually operates using a large number of investors, the reputable losses can prove to be huge for the company and individuals involved. More than half of the market participants believe that financial fraud will occur due to hedge fund fraud. Hedge funds obtain about one and a half trillion dollars worth of assets and securities. 
 
 
Hedge fund regulations predict large losses for investors, since over four hundred of the more than eight thousand hedge funds are under investigation for fraud. However, since hedge funds are private investment agencies, it is much harder for hedge fund regulation to be enacted. Hedge funds that are guilty of fraud or insider trading, are liable under the Securities Exchange Act of 1934.
 
 
Hedge funds regulation requires that all funds that exceed one hundred million dollars, and are traded publicly, must be reported to the SEC. Hedge fund regulations require that all hedge funds report substantial amounts of investment information to their investors to avoid financial fraud. The Exchange Act is a hedge fund regulation that requires companies to report all public investments to the SEC. Many times the equity of a hedge fund officer totals more than twenty five percent. This can cause that one officer to lose a substantial amount of money if an investigation occurs. 
 
 
Although hedge fund regulation places restrictions on companies, they do not always succeed in interrupting fraud. Many times the regulations against financial fraud are in response to the fraud. Only recently have regulations increased to prevent losses. Hedge funds are usually untouched by regulation fees, and penalty charges.
 
 
Even though hedge funds have to follow laws and regulations, they are regulated liberally. Unlike mutual funds, and the open market, private trade can operate differently. The losses experienced due to the to financial fraud within hedge funds has pushed regulation increases. Protection is given to managers and investors of stock to create a lower profit laws. Since hedge funds control a large portion of the economic flow, regulation is vital in preventing a catastrophic downfall in the economy. 
 

Hedge Fund Explained

Hedge Fund Explained

Hedge fund fraud cases are vital because
they give a base to the investment industry. The securities legislation that
covers fraudulent behavior on behalf of corporations does not clearly define
the punishments regarding hedge fund fraud. Hedge fund fraud is not clear cut,
which makes it difficult to apply securities law to it. However, hedge fund
news has recently connected valuation issues to fraud in an overwhelming
manner. In many ways the value of an investment is difficult to obtain. Hedge
fund fraud has to do with the value of the hedge funds assets, and securities.
The value can easily misrepresented in different ways. The value of a hedge
fund can be exaggerated upwards to hide losses or report a steady performance.
Hedge fund news has reported fraud that is used to cover up larger white collar
schemes within a corporation. Hedge fund news reports that valuation issues
contribute to almost sixty percent of hedge fund fraud cases. 


The United States Securities Exchange Commission has used the increase in hedge
fund fraud to crack down on registration requirements for hedge fund companies.
Hedge fund news helps emphasis the importance of investor due diligence on a
corporation. When conducting this type of background check on a hedge fund, it
is important that the investor be thorough. In the past hedge fund fraud has
been allowed trough insufficient due diligence practices. Investors have lost
large sums of money for not analyzing the answers that corporations give. An
investor can question key individuals before deciding to work with a hedge
fund. The auditor, funds coordinator, and managers are good resources for
information. If these individual hesitate to answer questions that deal with
public information, investigators can use private investigators. These
individuals can insure that the company has nothing to hide. Hedge fund news
has reported on the many ways an investigator can assist investors in following
through on their due diligence. 

Since the year two thousand and two hedge funds
have grown at a rapid rate. In addition, hedge fund news has reported fraud at
a rapid rate. Fraud within hedge funds has increased up to five times the rate
that it existed in the year two thousand and two. Hedge fund fraud news has
shown an increase in losses for the company, investors, and the economy as a
whole. Since hedge funds are increasing so rapidly the SEC regulations become
more important each day. The SEC provides risk evaluations that investors can
conduct on a company. In addition, the SEC requires that all hedge funds
practice transparency to ensure legitimate activity. 

Hedge Fund Fraud At A Glance

Hedge Fund Fraud At A Glance

A hedge fund is a form of investing that is private and involves intelligent investors. The backgroundHedge funds can be very profitable when they are running smoothly. When they begin to fail, assets can dwindle at a rapid rate. A hedge fund fails for different reasons including, problems with cash flow, and lack of returns. Hedge funds also experience losses and penalties.

 
 
Hedge funds are also investigated by the Federal Bureau of Investigation, which has tackled many different famous casesMore importantly, it depicts the need for more federal regulation. Hedge funds account for up to fifty percent of daily stock exchanges on the New York Stock Exchange. Hedge funds cover a significant amount of the economy. This makes it very dangerous for the economy to not regulate hedge funds. Automatically, hedge funds are carrying an investment risk of some sort. It is the job of the investor to research the company and weigh the risks against possible profits.Performing a due diligence and filing complaints are also ways to combat fraud.