Hedge funds seem like a relatively safe investment, which is why many people choose this type of fund to earn a high investment. However, hedge funds aren’t as safe as they are cracked up to be. Many have known associated risks and are not a great option for all types of investors. It is these risks that can lead to one type of hedge fund fraud.
If you or someone you know suspects you are the victim of hedge fund fraud, hire a lawyer for securities litigation now. Financial investors who attempt to scam their clients may walk away with your money in their pocket instead of growing it in an investment so it can return to your own.
A hedge fund can bring a high reward because it is a type of investment that can be made in a variety of ways, including in speculative and illiquid investments. It typically has minimal regulation. As a whole, investors put money into the hedge fund which then makes cash contributions in different investments. These funds are typically facilitated by hedge fund managers who earn a percentage of the investment growth as a fee; this should be a good enough incentive for the manager to make wise investments.
Understanding Hedge Fund Fraud
Hedge fund investments are not regulated by the U.S. Securities & Exchange Commission (SEC), which leaves them more susceptible to fraud than a regulated investment channel.
Altogether, not all hedge fund investments are scams or fraudulent. What makes them particularly prone to fraud is the lack of oversight by a qualified regulation, the standard high-risk nature of the investments, and the security of the hedge fund managers’ compensation.
However, hedge fund fraud usually rears its ugly head when the manager fails to disclose the full details of the investment, which can lead to an investor unknowingly investing in something that was described one way and performs another.
It can also be considered fraud when the manager fails to share about the fund performance honestly. Misleading reporting about the hedge fund is considered a form of fraud.
In one of the most serious cases, hedge funds can act as a cover for an investment scam, where the manager or managing firm collects money from individual investors and never makes real investments.
Fight Hedge Fund Fraud With Securities Litigation
Though hedge fund managers are not regulated by the SEC, they are still held to the fiduciary duty standards to do what’s right for the investor when investing one’s money. This means hedge fund managers can and should be held liable for fraud.
Securities litigation is a niche form of financial investment law that specializes in the highly-specific types of investment law. Securities attorneys are experts in a few areas of business law, such as hedge fund fraud.
Through securities litigation, an individual can hold managers accountable for:
- Breach of fiduciary duty
- Negligent misrepresentation
- Breach of contract
- Civil conspiracy
- Unjust enrichment
- Promissory estoppel
- Aiding and abetting fraud
About Sadis & Goldberg
For 30 years, Sadis & Goldberg has worked to protect the consumer in investment law. We are a securities law boutique firm that represents individual and institutional investors. Our offices are located in New York City, but we serve clients nationwide.
Our attorneys come from a variety of backgrounds, including former SEC attorneys who always strive to hold investors and corporations accountable for their actions. Our experienced team has taken many arbitrations and trials to verdict, earning multi-million dollar securities settlements, verdicts, awards, and arbitrations for our clients.
Learn more about how we can help you fight hedge fund fraud and earn back the money you deserve.