New York Based Hedge Fund Fraud Lawyers
Protecting the Rights & Interests of Investors 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.
We can help investors who have been misled as a result of fraud. Call (877) 905-7671 to schedule your consultation.
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
- 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.
30+ Years of Collective Experience
Our attorneys have over 30 years of collective experience representing clients in all aspects of securities and commercial litigation.
Contingency Fees for Our Securities Law Clients
We will not receive a penny in attorney's fees unless a positive recovery is obtained in your case. Contact us to see if you're eligible.
We will assess the merits of your claims and help you decide on the next step.
Litigated Claims in Excess of $50 Million for Our Clients
Our firm has successfully recovered over $50 million for our clients.