But the point is that all withdrawals from any fund are now suspect for 6 years. Thus if you have 80% of your net worth invested in hedge funds, mutual funds, investment funds, and ETFs, then when you cash in, you cannot spend a single cent for 6 years without risking bankruptcy if they turn out to be frauds.
Does this law threaten the existence of every fund in the USA?
- Thread starter Cutten
- Start date
But the point is that all withdrawals from any fund are now suspect for 6 years. Thus if you have 80% of your net worth invested in hedge funds, mutual funds, investment funds, and ETFs, then when you cash in, you cannot spend a single cent for 6 years without risking bankruptcy if they turn out to be frauds.
Yes, and now you have to add:
5) Do not invest money with any fund or partnership, because if they are a fraud, you may incur an immediate liability for all your distributions and principal up to 6 years after terminating the investment.
This means effectively that you can only invest in company stock directly.
Further question for any legal scholars here:
Does this clawback rule apply to dividends from "limited liability" companies and corporations? What about share sales?
For example, if you had sold Enron at $50 before it went broke, and collected dividends for a few years, then you were effectively in the same situation as the Madoff and Bayou fund investors i.e. you were benefiting (unknowingly) from fraud. Surely then you could be just as liable as the fund investors?
Could someone explain how fraudulent conveyance applies in hedge funds, but not in common stocks or bonds? If it applies in the latter, then the entire US market is worth almost nothing.
Does this clawback rule apply to dividends from "limited liability" companies and corporations? What about share sales?
For example, if you had sold Enron at $50 before it went broke, and collected dividends for a few years, then you were effectively in the same situation as the Madoff and Bayou fund investors i.e. you were benefiting (unknowingly) from fraud. Surely then you could be just as liable as the fund investors?
Could someone explain how fraudulent conveyance applies in hedge funds, but not in common stocks or bonds? If it applies in the latter, then the entire US market is worth almost nothing.
I really like ProfitTakigFool and hearing what he has to say. I would go as far as to call him one of the best posters on ET. When I read thet tidbits of his strat that he posts, and watch him get flamed, then read Anek post about his amazing trendfollowing strategies which gets a huge crowd of noobs to follow him... it really shows to me the wisdom that PFT knows of, which we all can learn from.
With that said...
PTF, there are many flaws in your argument. OK, not all hedgefunds should get shutdown because of MADF's shit. I agree with that. However...
You, PTF, talked about abuses in many different industries.
What if every parent who gave their child that overly concentrated apple juice had to pay restitution to the parents whose babies suffered from malnutrition?
What if Viox patients who didn't die, but actually lived better, had to pay restitution to the loved ones of those who died from Viox?
That is what is going on in the industry... hence Cutten's thread.
I should have written Stocks, over-hyped Real estates, Worthless giant companies are like "Dangerous Son" who will always be supported by his "Mother"(Hedge funds and Mutual funds).
Consider this example-: Osama Bin Laden will always be liked by his Mother, no matter how dangerous Osama is for the whole world. I can understand Osama's mother's thought & love. I have highest respect for Osama's mother.
Similarly, Hedge funds and Mutual funds are "the Mother and Father" of Stock markets, over-hyped real estates markets and Worthless giant companies.
Hedge funds and Mutual funds will always support & invest in Stock markets, over-hyped real estates markets and Worthless giant companies. They are not concerned about it & it does not matter to them "how dangerous these investments can be to the whole world".
Cant agree with you at all.
PTF is right in his remarks, otherwise we would all be apologising to the dead each morning for making it through the night.
Funds should stay within the law or their leaders go to jail and contributors shouldn't be so bloody silly when giving their money to strangers.
regards
f9
ETF's? I don't think that's even possible.
One more time....the probability that any of them are a fraud is something like 0.0001%. With that kind of probability of fraud, I will do that trade every day.
If one has 80% of one's assets invested in any investment partnership that one is not personally running oneself, then one is an idiot deserving of separation from his money. If one is properly diversified, then one won't have enough money with any single manager to risk bankruptcy if one of his managers ends up being a sociopath like Madoff or Israel.
Your whole argument is stupid. 80% of start-ups fail. Does that mean you shouldn't invest in a start-up? Since fraud can happen in any type of investment, does that mean we should prevent people from investing?
These investment partnerships are private contracts between private individuals. If you don't like it, you don't have to participate. Shove your money under a mattress or manage it yourself. You have no right to insert yourself and your opinion into a private contract between an investing and managing member in an investment partnership.