|
By Christine Gaylican, Opalesque Asia:
To assist investors and investment managers alike in pondering the best way to move forward in these changing and challenging times, hedge fund experts from the Singapore Management University (SMU) came up with vital recommendations to avoid investment fraud in future transactions.
In SMU’s latest newsletter in Sept-09, sent to Opalesque, Melvyn Teo, assistant professor for finance and director of the BNP Paribas Hedge Fund Centre, presented findings that could help spot fraudulent transactions before they erode into company financials.
Based on its academic research and other reports on the transactions and operational failures made by the officers of the Bernard L. Madoff Investment Securities (BMIS), and Bayou Management - started by Sam Israel and Daniel Marino in 1996 -, said investors and managers must be wary of the following key indicators:
1. Conflicts of interests are often symptomatic of more serious problems in hedge funds.
Simple awareness of the operational management flow and their correlation to subsidiaries should be a priority of investors.
Conflicts of interest have been evident in both cases of Bayou Management and BMIS, which were not seen before.
Bayou Management funneled all their trades through Bayou Securities—which was its stock trading subsidiary that also earned commissions from Bayou. This was an unusual practice in the hedge fund industry. Because Bayou’s trading ...................... To view our full article Click here
|
RSS
