When Brokers Are At Fault in Hedge Fund Frauds, Our Securities Fraud Lawyers Can Help
Questionable business practices by investment firms can undermine the safety of hedge funds
The minutiae involved and the comparatively lower oversight make hedge funds a risky proposition despite their frequent depiction as safe, high-return investments. Investors who rely on the guidance of brokers or other investment professionals can easily be led out of their depth into perilous financial situations when underhanded brokerage or investment agents perpetrate hedge fund frauds.
It is possible to lose money through hedge funds and not be the victim of fraud, as it is with any investment scenario. The warning signs of hedge fund fraud can be subtle or overt, and that is why it is crucial to contact an experienced stockbroker fraud attorney to explore the specifics of your individual situation. The Frankowski Firm protects investors who have been misled and lost money, not through the vagaries of the market, but as a result of fraud.
What kinds of potential fraud are involved in hedge funds?
While hedge funds have been characterized as low risk and high return, the reality is that there is significant risk involved in these investments. Because hedge funds often operate under a veil of secrecy, it can be hard for an investor, even with the aid of an experienced and trustworthy broker, to ascertain the real risk involved. Hedge fund managers are not obligated to disclose what the fund is invested in. Without knowing the field or industry of the investment, it is nearly impossible to claim that a hedge fund investment is suitable for a particular investor, which is how brokers end up acting as further culprits in hedge fund fraud.
Another concern for investors with hedge funds, even well managed ones, is that investors are not always immediately able to remove their money from the fund. The request can be denied, with or without reason or explanation. Ultimately, hedge funds offer little transparency about the specifics of what they invest in, and can hold investors’ money for an unspecified period of time, on top of being carrying an invisible high-risk status.
All the above cases presume a broker or investment firm is acting in good faith and honesty in recommending the hedge fund option, but what about when a broker knowingly misrepresents or omits crucial information about the hedge fund? This can be as simple as not disclosing conflicts of interest, or as serious as deliberately misleading investors about the risks or past performance of the fund. None of these are theoretical risks; our experienced hedge fund fraud lawyers have helped countless clients who have lost money as a direct result of such practices.
Get help from seasoned investment attorneys in handling hedge fund fraud
Investors rely on the good guidance of brokers and investment firms to select suitable investments to meet their unique needs. When either a broker or a hedge fund manager flagrantly disregards that suitability, call 888-741-7503 or reach out to The Frankowski Firm via our contact form to discuss your legal options.