I invested in a fraudulent hedge fund about 5 and half years ago. My final restitution check is due this month. The manager will not be back in the investment business. He is currently serving a 10 year sentence.
The reason is that you know very little about hedge funds, yet laugh at those who lost their money in this isolated case of fraud....
This fund changed their name 3x before people caught on. they were charging 15% management fees using a strategy that would earn 6%. It also provided upfront fees of 4% to advisors. This shows the extend of the greed in the industry. It turned a mediocre strategy into a marketing machine / money machine for "independent" advisors. There are numerous articles by the Globe & Mail that discuss the hierarchical fraud that took place, from advisor to CEO of Portus.
What's funny to me is that how many ET members think that this is a rare case. Mutual funds been running this scam for decades.
YES YES! its unbelievable how much mutual funds pay your local Edward Jones loser to pump up their stuff... There must be a better way to do things.
Not just that, but the whole management fee, it's free money. They can just invest in the market and if the indices do well, they claim skill & brains and if the indices do bad, they blame the market. Then there is the window dressing and the pumping, just one big mess. Either way, they get the fee and skim the investors moneys.
And Kin thinks your situation is funny and has no pity for you because you knew the risks. Investment risk and fraudulent risk are very different,Kin.
Couldn't have said it better myself Vic, I totally accept some investments going bad due to a manager's idiocy/incompetence, but not from kniving criminal activity.
It does sound like these guys certainly had a lot more talk than walk. I do feel sorry for those who got duped, but how many knew exactly what you just posted? and how would they? Sure some basic background research would probably fit the bill, but look how many people still spend tons on dubious crap, or do "stupid" things. Look at all the money pissed away on $2K a day trading seminars. What about Amway and other known pyramid schemes? There are millions of people pouring money into pure crap. How about all of those who have their identity stolen from throwing bills in the trash and not shredding them. To many of us, these things sound basic but to most of the public it is obviously not...not yet anyway. I feel sorry for those who lost their money that they didn't know better or weren't truly sophisticated enough to properly evaluate the situation. These guys running that fund need to be hauled out and trashed and do time for preying on people. Those who run legit operations are even more pissed about these bogus shams because they give the industry a bad name and one more thing for the media to bitch about. I turn my TV on this morning and see that Hennessee reports that hedge funds are down 1.75% for April and that traders are concerned that they might blow up. The S&P was down 2.09 for April. WTF? This is the garbage that gets spewn out to the masses. OK...off my soapbox.