I've seen multiple hedge fund frauds up close and personal. Investors who withdrew money before the fraud became known, will also experience heavy losses because they will have to give back money. Their withdrawals were made at higher percentages than they actually owned, in what we now know was a depleted fund. I've personally received such checks after legal action.
This will take years and more years and the lawyers, investigators and accountants will soak up a lot of it in the form of fees unfortunately. Even the lucky ones who go out will be clawed back in as you say. Unfortunate situation all the way around unless you are the receiver or one of the hundreds of lawyers involved of course.
Fortunately this should give a few out of work ex-Lehman and Merrill accountants something to do for the next 2 decades.
having been caught in the Tuco Trading Receivership I can assure this is going to take years and years. tuco was a simple non-fraud issue and I will havent got my last 50% back
Who ever thought it would be such a *liability* to invest in a black box right? It also occurs to me that the lawyers and accountants involved in this mess will find a way to skim another 30% off the top of all of the redistributed funds ever invested in his scheme...
Can you give examples of where investors who withdrew early were served with court orders to return cash? In normal theft, the unwitting recipient of stolen money (e.g. a shopkeeper) is never liable to return the cash. It would seem strange to give everyone in the country a perpetual risk of bankruptcy on the off-chance that they were at one point paid money by a thief.
I remember reading something about this happening a while back. I think it was in the economist. From what I remember it also has to do with the partnership structure of the funds.