there is an old saying thateverything in the world in deductible on your taxes until "you get audited" sme with this. sure you can get away with it. until you have that first comtomer complaint and the nfa/cfct/sec/nasd come knocking at your door and says "show me the money". "show me the records"
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Resetting NAV to produce fake track record?
- Thread starter jerryz
- Start date
Quote from progers82:
there is an old saying thateverything in the world in deductible on your taxes until "you get audited" sme with this. sure you can get away with it. until you have that first comtomer complaint and the nfa/cfct/sec/nasd come knocking at your door and says "show me the money". "show me the records"
If you are an off-shore hedge fund...
And you deal only with "accredited investors"...
Any financial reporting you would do would be very minimal...
And would certainly NOT extend to complex areas such as NAV and Unit Value.
I owned a US broker-dealer for 7 years with MAX reporting requirements...
And my business is structured as a Partnership...
And at no time was I ever required to address Unit Value or past performance claims with the NASD.
The complexities of Unit Value calculation, etc...
Is way beyond the scope of the NASD and SEC examiners.
This kind of detail can only be addressed in the court system via a lawsuit.
Good luck with your lawsuit in Gibraltar.
Basically, hedge funds can fudge their past performance numbers any way they like...
They are not stealing assets... just "mistaken" about past results.
Unregulated offshore hedge funds have ** no reason ** to be more reputable...
Than, say, unregulated offshore casinos run by organized crime.
Quote from jerryz:
lol can anyone explain how this works?
"All I needed was a fabulous track record, which, it turns out, could be arranged. A woman who had worked for a company that sets up hedge funds in the Caymans - Ms. Caymans, I'll call her - gave me this simple yet invaluable tip: Hire an auditor to reset your NAV (net asset value) after you've had a good quarter. Ms. Caymans said, "If you're trading your own money to start, no one will know.""
http://biz.yahoo.com/weekend/hedge_2.html
I also saw this article on yahoo this morning... what great sensationalist drivel. I want the 5 minutes of my life I wasted reading that piece back.
That being said, it does bring up a mounting concern about the increasing scandal and bad PR that the HF community has been receiving. Since the barriers to entry are so relatively low, it seems that everyone and their mom wants to start a HF. Of course when this happens there are some who are out to rip others off. This is the SEC's dilemma - how to regulate or audit these private alternative investment vehicles, many of which are outside of the US.
I do fear that there is a sort of "hedge-fund bubble" growing... at one point I thought it would take care of itself due to survivorship bias but it seems some would-be managers, after blowing up, will just start a new entity.
At the end of the day it will be increasingly important for potential accredited investors to do their due dilligence before forking over any money. Incidently, this is the same process for any business venture or potential investment.
fun article - cheers!Quote from jerryz:
lol can anyone explain how this works?
"All I needed was a fabulous track record, which, it turns out, could be arranged. A woman who had worked for a company that sets up hedge funds in the Caymans - Ms. Caymans, I'll call her - gave me this simple yet invaluable tip: Hire an auditor to reset your NAV (net asset value) after you've had a good quarter. Ms. Caymans said, "If you're trading your own money to start, no one will know.""
http://biz.yahoo.com/weekend/hedge_2.html
that's why you need a reputable fund administrator if your NAV's going to be reliable / credible...