Investment Advisor Barred From IA Industry For Matching Trade Fraud
Hedge fund managers should not match trades between commonly managed accounts in thinly traded (or illiquid) securities as this may pose potential problems under the Investment Advisors Act of 1940. This holds true whether the hedge fund manager is registered or unregistered. As the release below shows, the manager may be subject to fines and/or [...]
Fraudulent Commodity Pool Operator Issued Injunction
A commodity pool operator is issued an injunction for fraudulent behavior. In classic fashion, this fraudster touted performance results which were grossly inaccurate. The scheme ended earlier this year and investors lost almost $6 million dollars. As we’ve noted before, hedge fund investors (including those investors in commodity and futures hedge funds) need to make [...]
Pooled Investment Vehicles – Non-Traditional Hedge Fund Strategies
The term “hedge fund” is really a misnomer as most hedge funds are not hedged. A better term would be pooled investment vehicle. Traditional types of pooled investment vehicle structures include hedge funds, private equity funds, venture capital funds, real estate funds, and “hybrid” funds (funds which combine components of the above).
This article is going [...]
Hedge Fund Analyst Fined for Insider PIPE Trading
According to a SEC litigation release, a hedge fund analyst was fined $317,000 for engaging in insider trading with regard to a PIPE investment. PIPE transactions are subject to close scrutiny from the SEC. In this instance the fund which the analyst worked for established a short position in a company which was completing a [...]
NFA sends request for financials to Commodity Hedge Funds
Hedge fund managers which are licensed as commodity pool operators (CPOs) should have received an email from the NFA which requests certain financial information. While not disclosed on their website, the NFA sent a request on Friday to all of the CPO Members. Each member will need to make a filing which represents [...]
SEC ends CSE program for investment banks
Last week Goldman and Merril announced that they were going to convert to bank holding companies. A good article on the conversion, including questions and answers, can be found here. An interesting consequence of the change is that the SEC’s Consolidated Supervised Entities (CSE) program is no longer necessary.
The CSE was a unique program where [...]
CFTC Fines Hedge Funds for Failure to File Annual Report with NFA
Certain hedge funds which trade futures and/or commodities as part of their investment program are deemed to be commodity pools and the hedge fund management company must register with the NFA as a commodity pool operator (CPO). Registered CPOs must file annual reports with the NFA and such reports must be sent to investors in [...]
SEC Wins another Hedge Fund Fraud Case – Provides Insight to Hedge Fund Managers
Hedge fund fraud cases are important because they give some definition and life to the various investment advisor and hedge fund laws. Much of the advice that hedge fund lawyers give to their clients is based on reasonableness and best guesses on how the securities laws will be implemented in the hedge fund context. For [...]
SEC brings fraud charges against investment advisor in connection with hedge fund investments
Investment advisors who recommend hedge fund investments should be very careful to disclose all material agreements between the advisor and the hedge fund and hedge fund manager. In the case below an investment advisor recommend hedge fund investments to its clients without disclosing to such clients that the advisor was receiving a part of the [...]
Hedge fund performance fees – is it time to rethink the high watermark?
There are many news stories out covering what may be a worst case scenario for many hedge funds – the distinct possibility of no performance fees this year. This seems to be a major topic of conversation for many people within the industry and just yesterday I received the following comment with a link to [...]
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