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.