In what represents an unbelievable screw-up, professed hedge fund due diligence firm Hennessee Group was charged by the SEC with not performing the due diligence it supposedly provided to hedge fund investors who used their services.  According to the SEC Administrative Order, Henessee did not perform certain key elements of [...]

Private Group Promulgates Hedge Fund Best Practices Under direction from the President’s Working Group on Financial Markets, a private sector group comprised of financial industry professionals and regulators released a finalized set of best practices for hedge funds and hedge fund investors. 

The hedge fund industry has been shaken by volatile financial markets and the Madoff investment scandal of December 2008.  While the hedge fund and investment management industries are changing because of these twin forces, many people are looking back to try to piece together what has happened and more importantly [...]

Hedge Fund Questions For the new year we will publish a list of common questions we receive from our readers.  This question involves hedge fund valuation. Question: Can a hedge fund provide its own valuation? Answer: Generally yes, provided that the hedge fund offering documents state that the valuation of [...]

Another Investment Advisor Ponzi Scheme In the wake of the Madoff scandal the SEC is taking out other fraudulent investment advisory firms.  The release below details a south Florida investment advisor who perpetrated a multi-million dollar ponzi scheme.  As we noted in Lessons in Hedge Fund Due Diligence, it is [...]

According to a SEC release this morning (and every other financial news agency), major hedge funds, banks and other financial institutional were caught in a Ponzi scheme of epic proportions.  While it is hard to believe that such large groups were blindsighted by this, it does showcase the fact that [...]

Usually our discussion of hedge fund frauds revolves around unscrupulous promoters who engage in some sort of fraudulent behavior against hedge fund investors.  Most of the time the fraud is based on some sort of ponzi scheme.  However, in the case reprinted below, the fraud was actually perpetuated against many [...]

In these uncertain and volatile markets hedge fund due diligence is more important than ever.  We’ve discussed how hedge fund due diligence is likely to change, but it is also important to note that hedge fund frauds can be detected through simple due diligence procedures.  In this vein, the NFA [...]

As we have discussed previously, hedge funds, and the investment management industry, are likely to face increasing regulations in the future.  As we look toward Congressional testimony by hedge funds (see Congress to talk with Hedge Funds on November 12) and by other government officials, we have decided to look [...]

This past week has seen no shortage in the amount of articles on the hedge fund industry and the effect of the market and governmental events.  Below I’ve highlighted a few stories which I found particularly interesting and relevant for hedge fund managers.  Additionally, I think the following are points [...]