Call Now For a Free Consultation:
(614) 532-4576
Nationwide Representation

Signs of Hedge Fund Fraud

Consult with Our Legal Team
There is never a cost associated with a consultation
Common Questions
For The Advocacy You Deserve Contact Us Today!
We’ll respond and let you know the best way to proceed with your case.

What Are Signs of Hedge Fund Fraud? How Can I Protect Myself?

We at Meyer Wilson encourage you to come in and speak with our attorneys if you suspect you’ve sustained investment losses due to hedge fund fraud. Hedge fund fraud cases can be particularly complicated, and you will probably find it helpful to discuss the details of your situation with an experienced professional who can offer specific guidance and protect your interests.

That being said, there may be many signs that a hedge fund is an investment scam:

  • Prior investor complaints or litigation history
  • A concentration in illiquid or difficult-to-value investments
  • Pressure to invest or assurances that the hedge fund is “completely safe”
  • A lack of regular audits by an independent accounting firm
  • Unusually good performance long term, especially in a poor market
  • Lack of transparency or lack of trading independence
  • Managers who trade in their own accounts

Additionally, according to the FBI, most legitimate hedge funds charge 1-2% of total assets managed and 20% of profits. Legitimate fund managers don't earn commissions on sales. If a hedge fund manager is being paid on commission, then that could be a red flag.

Due Diligence Key to Protecting Against Hedge Fund Fraud

With more examples of hedge fund fraud coming to light all the time, it is difficult to remember that legitimate hedge funds do exist. In fact, hedge funds can offer significant benefits to wealthy, sophisticated investors. However, due to the fact that hedge funds are private investment partnerships that are subject to minimal regulations and utilize complex investment strategies, they often carry a great deal of risk, including the risk of fraud. It is for this reason that conducting proper due diligence is absolutely necessary in order to protect oneself from fraud.

On its website, the FBI offers tips for investors on how to conduct a thorough investigation into the legitimacy of a hedge fund. Some examples of proper due diligence include:

  • Reviewing for past regulatory actions against the fund manager;
  • Locating and speaking with fund administrators and noting their independence;
  • Being sure a reputable independent accounting firm performs an annual audit; and
  • Hiring a non-affiliated due diligence firm to perform a more thorough background check.

Stockbroker fraud related to hedge funds can cause serious losses for vulnerable investors—and recovering those losses can be difficult. If you have lost money investing in a hedge fund and suspect fraud, please reach out to an experienced investment fraud attorney today to learn more.

You can learn more about hedge funds by watching our helpful video.

Atlanta Office

945 East Paces Ferry Road, Suite 2275
Atlanta, GA 30326
Columbus Office

305 W. Nationwide Blvd
Columbus, OH 43215
Meyer Wilson
New Orleans Office

900 Camp Street 
Suite 337
New Orleans, LA 70130
Los Angeles Office

2029 Century Park East,
Suite 400N
Los Angeles, CA 90067
Cleveland Office

4781 Richmond Rd.
Suite 400
Warrensville Heights, OH 44128
Bloomfield Hills Office

41000 Woodward Ave.,
Suite 350
Bloomfield Hills, MI 48304
Quick Links
The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter. No recipients of content from this site, clients or otherwise, should act or refrain from acting on the basis of any content included in the site without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the recipient's state. Read More
The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter.
Read More
crosschevron-down linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram