George Fontanills and Larry McMillian proved you can start out making decent money trading options and turn that into a million dollar fortune by writing books and giving seminars and selling worthless trading signals.
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Famous option traders
- Thread starter macrotrader
- Start date
I pretty much get the rights of investors/partners. However, is he not subject to SEC supervision because of number of partners or way it was sold or both? I recall complaints that the SEC ignored, however, would they have discovered the fraud had they enforced their right (if they have it) to audit them?Quote from Mike Okistini:
Hedge Funds are private entities and are not required to hand over any of their detailed trading accounting to you as a prospective investor. You can ask for financials but they will most likely be generalize financials of the financial state of the management company. However you will never really get access to the trading accounting of the fund as an outside person or even as a limited partner/member in the fund. So the main challenge is that you basically have no right to the trading accounts paperwork. The hedge fund controls what it release so you can bet what they release is stripped down or not telling the whole story.
That is why you have to really look into what they are trading and what their returns are and the credibility of who is running it. Even then, hedge funds can generalize the descriptions of their strategies. The few prospectus I have read are so generalized they claim they trade options futures, equities, forex, exotics, etc.. but no detail on their strategy.
Hedge funds for the limited partner are like investing based on faith in a way...
Quote from HowardCohodas:
I pretty much get the rights of investors/partners. However, is he not subject to SEC supervision because of number of partners or way it was sold or both? I recall complaints that the SEC ignored, however, would they have discovered the fraud had they enforced their right (if they have it) to audit them?
Hedge funds, for the most part, are not subject to SEC regulation. I think there were suspicions of fraud which was why a complaint was raised. But hedge funds still can operate outside government regulation thanks to the exceptions listed in the SEC laws and statutes.
The SEC investigation was sheer incompetence. 1/2 a dozen inquiries and examiners were sent in twice and Madoff lied through his teeth. Answers given to the first investigatory team contradicted responses to the second and there was no follow up on these inconsistencies. One hand of the SEC had no clue what the other was doing (had done). They failed to request subpoena power and relied on documents provided by Madoff. LOL...Quote from eudaemon:
Incredible he pulled that off for so long and so big. Did he have very good reputation or help from powerful people?. I know he was once head of Nasdaq, but still...
That Madoff could get so far is really impressive...and suspicious... [/B]
After being caught, Madoff commentedthat he was stunned that he was able to BS his way through the examinations. They had him dead to rights and couldn't connect the dots.
Quote from kinggyppo:
perhaps Madoff should be included his split strike strategy was bunk maybe someone can explain how to identify this type of fraud.
http://nakedshorts.typepad.com/files/madoff.pdf
From the article:
Market volatility, moreover, is the strategyâs friend, says Madoff, as one of the fundamental ideas is to exercise the calls when the market spikes, which with the right stock picks would add to the performance.
That should have been a red flag.