Many investors choose hedge funds as a high value, diversified investment that is generally safe from market fluctuations and other investing uncertainty. In the center of a hedge fund is the hedge fund manager who collects roughly 20% of the profit made on the hedge funds. This hedge fund manager, although benefiting from the arrangement, has a fiduciary duty to not gain an undue benefit or advantage from the clients while performing his duty to them.
In situations where the fund itself is not fraudulent, a dishonest hedge fund manager may skim from the earning of the hedge fund and alter earnings reports reflecting lower gains or even losses. This misappropriated money may or may not be claimed for the purposes of taxation by the hedge fund manager to avoid detection. This of course adds tax evasion to the litany of other legal issues the fraudster will face.
Those that are under investigation for hedge fund manager fraud will have their finances examined and a through audit will take place to find misappropriation, cooperation by other parties to defraud investors and possible tax evasion and other violations of securities laws. If you are under investigation for fraud by the SEC contact a New York Criminal Defense Attorney at 212-577-6677 for an immediate consultation.
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