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.
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.