Is managing retail money inherently riskier from a legal perspective than managing qualified investor's money? More importantly, does staying within the CTFC/NFA rules and passing the audits protect a manger when sued by disgruntled retail investors due to loses? (In other words, marketing rules were followed and disclosure documents were audited, etc.) As I understand most HFs are structured as a limited partnership that shields the fund's and managers' assets from being vulnerable to a lawsuit by investors. Do managed futures managers (CTAs) have the same or better protection. Does a manager who simply advises (through power of attorney) in a less vulnerable position than a hedge fund manager?
The LP protects the investors by limiting their liability to the funds invested. The manager of the fund is normally a General Partnership. None of this will stop an investor from suing you if you break the law or do business contrary to your Investment Management Agreement.
Assuming one does not break the law or the Management Agreement, what would the chances be that retail investors could successfully sue a manager/fund? Any past precedent cases you could think of off hand?