Karen at court

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newwurldmn said:
She had net losses
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We don't know that. Not enough info.

What we do know is that the claim essentially confirms a legitimate profit (and the establishment of a new HWM) during the period in question via para 90 by including the words "most of the...".

Most of the incentive fees would not have been paid in the absence of the Scheme Trades
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The legitimate HWM could have been established early on in the period or near the end of the period. We don't know so we don't have enough info to comment on the overall fund performance.

Further she ran a quasi Ponzi scheme because if you redeemed you left your share of the unrealized losses behind.
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Agreed.
 
atrp2biz said:
We don't know that. Not enough info.
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So are you saying that all the financial media misread the Complaint and reported the 50+ mill loss incorrectly and you are the only one who interprets it correctly? Boy, do I have a special lollipop for you!

For the last time, if no losses, no need for the scheme trades. Are you trying to say that she was treading water and just breaking even and that is why she invented the scheme trades? Nope, once she had a fairly decent DD, she needed years to make it back, thus she would have worked for free, because of the incentive set up of the fund. A slightly down performance would have caused only a few months management fee loses...

I''ll tell you what, instead of my promised cookies, why don't you download the second Complaint for $5 and see if it is more in depth about the losses?

Here is the summary of the original, according to the SEC:

https://www.sec.gov/litigation/litreleases/2016/lr23551.htm

"The scheme has enabled Hope Advisers to avoid realization of more than $50 million in losses in the hedge funds while earning millions of dollars in fees to which they were not entitled."

The SEC itself states they had 50+ mill losses, what more do you need?
 
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I thought of a way how they can get Karen. I think there has to be a regulation that states that a fund manager has to act in the investor's best interest. So any trade has to have some kind of profit potential no matter how risky. Even buying lottery tickets is allowed, because there is a chance for a win.

The scheme trades can be easily proven not having any chance of profit making thus not in the best interest of the investors. Thus she acted against regulations when designed such trades. It was in her best interest and not the investors'. There, I have just won the case for the SEC.
 
So are you saying that all the financial media misread the Complaint and reported the 50+ mill loss incorrectly and you are the only one who interprets it correctly? Boy, do I have a special lollipop for you!
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I don't know what the financial media is printing, but a $50 million unrealized loss doesn't mean the fund lost money on a net basis. I don't know how many times I have to explain this so perhaps I'll try another approach.

My overall P/L is positive for the year, however my unrealized P/L is negative. How is this possible? The answer to this question will hopefully shed light on the distinction.

For the last time, if no losses, no need for the scheme trades. Are you trying to say that she was treading water and just breaking even and that is why she invented the scheme trades? Nope, once she had a fairly decent DD, she needed years to make it back, thus she would have worked for free, because of the incentive set up of the fund. A slightly down performance would have caused only a few months management fee loses...
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This statement shows your inability to think critically. Losses are not a condition precedent to enter into a trading scheme. The desire to simply earn higher fees could be a motivation.
 
atrp2biz said:
We don't know that. Not enough info.

What we do know is that the claim essentially confirms a legitimate profit (and the establishment of a new HWM) during the period in question via para 90 by including the words "most of the...".



The legitimate HWM could have been established early on in the period or near the end of the period. We don't know so we don't have enough info to comment on the overall fund performance.



Agreed.
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If I recall the original claim documents said she had a net loss. But I read the docs a while ago
 
atrp2biz said:
My overall P/L is positive for the year, however my unrealized P/L is negative.
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I assume if you summarize those 2 numbers you get a number in the green. In her case that number is in the very red...
 
Karen story always looked suspicious to me, long before the SEC complaint. The numbers just didn't add up. The only way make 25-30% annually with selling naked options is leverage. Combine leverage with naked strangle strategy which is very risky to begin with is a certain path to financial disaster.

To those who claim she did not have losses - just read the SEC complaint:

"The HI Fund had an NAV of approximately $136 million as of February 29, 2016. 23. As of the same date, the HI Fund had unrealized losses of approximately $57 million."

Read more:
 
newwurldmn said:
If I recall the original claim documents said she had a net loss. But I read the docs a while ago
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I haven't seen a reference to a net number but I'd be happy for someone to point it out to me. However, everyone seems to reference the unrealized number which is only half the story.

I'm trying to be objective by drawing a conclusion with the information provided. So far, the information provided does not allow me to draw a conclusion one way or another on whether or not the fund lost money. There are several scenarios (both profitable and unprofitable) of how the fund performed that remain consistent with the claim.

I see a lot of herd mentality (generally speaking--not necessarily the Karen topic) with conclusions drawn when a conclusion can't be made. I desperately try to avoid this behavior by drawing my own conclusions with the necessary information. Maybe it's the blue in me (re: Insights).
 
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