Hedge Fund Ad-ban.. Causing More Problems Than Its Worth?

Hedge Fund Ad-ban.. Causing More Problems Than Its Worth? Free Online Articles Directory Why Submit Articles? Top Authors Top Articles FAQ ABAnswers Publish Article Login Login via Register Hello My Home Sign Out if($.cookie("screen_name")) { $('#logged_in_true li span').html($.cookie("screen_name").replace(/\+/g,' ')); $('#logged_in_true').css('display', 'block'); $('#top-authors-tab').css('display', 'none'); } else { $('#logged_in_false').css('display', 'block'); } Email
Password
Remember me?
Lost Password?
Home Page > Finance > Investing > Hedge Fund Ad-ban.. Causing More Problems Than Its Worth? Hedge Fund Ad-ban.. Causing More Problems Than Its Worth? Posted: Aug 18, 2008 |Comments: 0 |

If ever there was an argument for the advertising ban on Hedge Funds to be lifted it is this one. Over three years a brazen group of New York scam artists raised about $30 million from unsuspecting investors by posing as principals of a successful hedge fund and then fled with the loot.

Investments from $5,000 to $500,000 were obtained from college professors and educated professionals. It took the group a little more than three years, from early 2003 September 2006 to raise the $30 million.

A grand jury empaneled by Michael J. Garcia, the U.S. Attorney in Manhattan, is said to have handed up a sealed indictment in the case, according to a lawyer hired by 10 of the victims, who said that the FBI was investigating the matter.

The criminals are clearly to blame here, however, this is a problem that, in our opinion, is caused in part, by the regulators themselves.

There is a scam out there that is based on "Prime Bank Guarantees" or "Medium Term Notes" that has taken billions from investors with promises of astronomical returns. The SEC web site says:

"Lured by the promise of astronomical profits and the chance to be part of an exclusive, international investing program, investors are once again falling prey to bogus "prime bank" scams. These fraudulent schemes involve the purported issuance, trading, or use of so-called "prime" bank, "prime" European bank or "prime" world bank financial instruments, or other "high yield investment programs" ("HYIP"s). The fraud artists who promote these schemes often use the word "prime" – or a synonymous phrase, such as "top fifty world banks" – to cloak their programs with an air of legitimacy."

The thing that allows the bogus 'brokers' and 'investment managers' of this fraud to operate is that they have created a veil of secrecy over the whole operation. The SEC says:

"Promoters claim that transactions must be kept strictly confidential by all parties, making client references unavailable. They may characterize the transactions as the best-kept secret in the banking industry, and assert that, if asked, bank and regulatory officials would deny knowledge of such instruments. Investors may be asked to sign nondisclosure agreements."

This 'secrecy' is what perpetuates the fraud. Simply put, the peddlers of this scheme will tell you that when you do your research that you will find everyone denying the existence of the scheme. They will say that those not in the industry don't know about it because there would be outrage that rich people could make so much money and those in the industry will deny it because they either aren't high enough up or are trying to keep it a total secret. They will also tell you that a minimum investment of $10mn is the norm, but they have split up that $10mn to allow their investors in.

This secrecy is the perfect cover, and I speak from personal experience, 15 years ago as an investment pup, to my eternal shame, I got caught in a the same scam.

So we have an 'investment' that is supposed to be super secret, has a minimum investment and is not advertised anywhere. Do elements of this ring any bells?

Simply put, the regulators are perpetuating the 'secrecy' of hedge funds by not allowing advertisement of the funds. Their rules about only being able to invest a certain amount of money did not protect the people in this case who invested $5000, did it? Something tells me the scammers did not check to see what the net worth of the investors was either.

How would advertising funds have helped? As with everything, the fact that advertising is allowed generates an awareness of a particular industry. How many of you knew how to play poker before the online casinos plastered the web with advertising? My limit was 'Snap', now I am a stone cold poker shark.

By the very nature of advertising and, therefore, informative web sites, brochures etc etc, this kind of fraud would be more difficult to perpetrate because the veil of secrecy would be lifted for all to see.

Of course, there will always be criminal elements who will attempt to subvert whatever rules are out there but the regulators throughout the world don't need to make it easy by perpetuating a secrecy myth that can be exploited by the criminal element.

Retrieved from "http://www.articlesbase.com/investing-articles/hedge-fund-adban-causing-more-problems-than-its-worth-525600.html" (ArticlesBase SC #525600)

Watch your traffic increase just by submitting articles with us, click here to get started. Liked this article? Click here to publish it on your website or blog, it's free and easy! David Brown - About the Author:

The author has spent 20 years in the financial services industry trading everything from physical commodities to futures. Currently writes for a variety of sites including online trading sites and general market information sites.

Questions and Answers Ask our experts your Investing related questions here... Ask 200 Characters left Do hedge funds beat the market? How is a hedge fund structured? How many hedge funds in the us? Rate this Article 1 2 3 4 5 vote(s) 1 vote(s) Feedback Print Re-Publish Source:  http://www.articlesbase.com/investing-articles/hedge-fund-adban-causing-more-problems-than-its-worth-525600.html Article Tags: hedge fund, hedge fund advertising, regulators, investment, financial, money Related Articles Latest Investing Articles More from David Brown Alternative Investments in Finance

Alternative investment involves investment in assets other than the traditional products of stocks, bonds or cash. These assets include the likes of art, antiques, wine, coins or rare stamps – in other words, rare items. Financial assets like commodities, private equity, hedge funds and financial derivatives are also accommodated in alternative investment.

By: Bert Clichél Finance> Investingl Oct 18, 2010 Responsibilities of a hedge fund manager

Managing a hedge fund requires knowledge about how this special investment vehicle works. Research well before you take an initiative in this field.

By: Ashley Smithl Lawl Aug 17, 2010 lViews: 127 THE INFLUENCE OF GLOBAL FINANCIAL CRISIS ON FINANCIAL MARKETS

THE INFLUENCE OF GLOBAL FINANCIAL CRISIS ON FINANCIAL MARKETS

By: lamara qoqiauril Financel Mar 29, 2009 lViews: 2,514 Crisis in World Economy and the Proposed New Model for Sustainable Development

The ongoing turmoil in world economy raised the doubt that present model of capitalism cannot be sustained for environmental and social reasons. Whole system is complicated by lack of transparency. Hedge funds are cloaked in secrecy- even bailout money has disappeared with no effect to the economy. In this treatise some key issues in this crisis are discussed and a new model is proposed which will engineer a balanced global society that is globally conscious, active and sustainable.

By: Dwijadas Ghosall News and Society> Economicsl Dec 24, 2008 lViews: 212 Stock Market

The stock market. To some it’s a puzzle. To others it’s a source of profit and endless fascination. The stock market is the financial nerve center of any country. It reflects any change in the economy. It is sensitive to interest rates, inflation and political events. In a very real sense, it has its fingers on the pulse of the entire world.Taken in its broadest sense, the stock market is also a control center.

By: Michael Newmanl Businessl Sep 29, 2009 lViews: 234 Credit Suisse Gold – 7 Important Reasons To Buy Credit Suisse Gold Bars

When you buy gold bullion bars minted by Credit Suisse you know that you are acquiring a trusted asset with guaranteed weight and purity. In addition, the excellence of the Credit Suisse logo means that these particular bullion bars are readily accepted all over the world and can be easily liquidated if you so desire. The company is one of the most trusted names in the precious metals industry!

By: Christina Goldmanl Finance> Investingl Jul 04, 2011 Expert urges Britons to avoid long-term savings accounts

Long-term savings accounts should not be considered often by consumers, it has been said.

By: Fixed Rate Bondsl Finance> Investingl Jul 04, 2011 Borrowing or Withdrawing Money from Your 401 k Plan

If you have a 401(k) plan at work and need some cash, you might be tempted to borrow or withdraw money from it.

By: Ishan Goradiyal Finance> Investingl Jul 04, 2011 Searching for the Best Mutual Funds

In case you are investors and wanting invests some money, you might be looking for best mutual funds to get your tough earned money in. If this describes accurate, you may have a good deal of alternatives right in front of you. You will locate hundreds of mutual funds inside the world so that you are able to invest in and all sorts of you should do is to use the best mutual funds for your investment.

By: Bern Ortizl Finance> Investingl Jul 04, 2011 Recurring deposit helps cover the specific costs

A recurring deposit (RD) allows you to put aside small sums at regular intervals. Many rarely have a lump sum in their accounts to rescue them from a financial crisis. Saving regularly enables you to plan ahead for expenses and avoid falling into high-interest debts to meet the requirements.

By: Vickyl Finance> Investingl Jul 04, 2011 Parental Control Free Software - Granny Power!

We all our our grandparents but is our modern lives breaking the cycle of positive influence by this precious generation?

By: David Brownl Technology> Communicationl Mar 05, 2010 Free Parental Control Software

Keeping kids safe on the web is one of those things that everyone wants to do, but very few companies actually do anything about it. Barriers to entry, increased overhead and lower subscriber numbers are some of thing that scare people away, one site, however is heading into the fray with a very cool offering.

By: David Brownl Computers> Softwarel Feb 23, 2010 How to Trade Commodities

In today's markets the commodities sector is one of the most volatile. I was always taught that 'volatility is our freind', if this is true the commodities market could become your best friend.

By: David Brownl Finance> Investingl Oct 09, 2008 lViews: 740 lComments: 1 How to Become a Stockbroker in the UK

The traditional stockbroker is dead, OK, if not dead the fat lady is definately warming up. If you want to get involved in the industry we let you know where you should be looking.

By: David Brownl Finance> Investingl Aug 22, 2008 lViews: 2,371 Add new Comment Your Name: * Your Email: if($.cookie("screen_name")) { $('#not_logged_in').hide(); } Comment Body: *   document.write(''); Verification code:* * Required fields Author Navigation My Home Publish Article View/Edit Articles View/Edit Q&A Edit your Account Manage Authors Statistics Page Personal RSS Builder My Home Edit your Account Update Profile View/Edit Q&A Publish Article Author Box David Brown has 7 articles online Contact Author Subscribe to RSS Print article Send to friend Re-Publish article Articles Categories All Categories Advertising Arts & Entertainment Automotive Beauty Business Careers Computers Education Finance Food and Beverage Health Hobbies Home and Family Home Improvement Internet Law Marketing News and Society Relationships Self Improvement Shopping Spirituality Sports and Fitness Technology Travel Writing Finance Accounting Banking Credit Currency Trading Day Trading Debt Consolidation Insurance Investing Loans Mortgage Personal Finance Real Estate Taxes Wealth Building Need Help? Contact Us FAQ Submit Articles Editorial Guidelines Blog Site Links Recent Articles Top Authors Top Articles Find Articles Site Map Mobile Version Webmasters RSS Builder RSS Link to Us Business Info Advertising Use of this web site constitutes acceptance of the Terms Of Use and Privacy Policy | User published content is licensed under a Creative Commons License.
Copyright © 2005-2011 Free Articles by ArticlesBase.com, All rights reserved.

View the original article here