Reasonable-Basis Suitability

Hedge Fund Fraud Attorneys Representing Clients Nationwide

Hedge funds have become increasingly popular in the world of investments. Despite their popularity, some hedge funds were involved in high-profile investment frauds and scandals. These cases were caused by the questionable business practices of investment firms, which undermine the safety of hedge funds. If you want to invest in hedge funds and plan to use the services of brokers or other investment specialists, proceed with caution. It is important to contact an experienced and trusted hedge fund fraud attorney to explore the specifics of your investment opportunity. At Weltz Law, our hedge fund fraud lawyers are committed to protecting the interests and rights of investors nationwide. We can help investors who have been misled as a result of fraud.

Understanding Hedge Funds

Hedge funds pool money from accredited investors and then invest the money. These funds, however, are not subject to regulations that are designed to protect investors. In addition, hedge funds lend themselves to riskier and more flexible investments strategies, e.g., derivatives, short-selling, leverage, and other speculative investments. It is important to note that certain federal and state laws – concerning mutual funds – do not apply to hedge funds. For example, the SEC (U.S. Securities and Exchange Commission) states that hedge funds do not need to provide the same level of disclosure as mutual funds do. Without these disclosures, it is significantly more difficult than before to accurately evaluate the terms of a hedge fund investment or verify representations you will receive from it.

Common Examples of Hedge Fund Fraud

The main types of hedge fund fraud include insider trading, Ponzi schemes, misappropriation of investor funds, and material misrepresentations to investors. These funds are liable for insider trading violations when securities are bought and sold in breach of a fiduciary duty, trust, or confidence. In addition, one can commit hedge fund fraud while selling or buying with nonpublic information about the security.

Misappropriation refers to the illegal use of funds of another person for personal and unauthorized purposes. The SEC defines Ponzi schemes as paying purported returns to existing investors with fund contributions from new investors. Ponzi scheme perpetrators typically solicit new investors by enticing them with high returns with little or no risk.

Issues with Hedge Funds – Lack of Oversight

Because hedge funds do not need to register with the SEC, fraudulent brokers can solicit significant initial investment sums from investors and take advantage of them through over-optimistic claims. Not all hedge funds, however, are investment scams. In fact, most of these funds are legitimate investment vehicles designed for risk-tolerant and sophisticated investors.

Suitability Supervision?

Meet with a Seasoned Securities Litigation Attorney to Discuss Your Hedge Fund Fraud Case

If you have suffered significant financial losses from a hedge fund fraud, our attorneys will help develop a strategy to recover damages from perpetrators. Weltz Law’s attorneys have a collective experience of over 30 years and we have the resources and expertise necessary to investigate and pursue hedge fund fraud claims. Feel free to schedule an appointment with Weltz Law by calling 877-935-8952 or submitting this online form.