Hedge-Fund Investors Hire Private Investigators

Bloomberg finds an interesting story; investors in hedge funds are hiring private investigators to look into the funds:

Background checks can take from two to six weeks, and may cost about $1,000 for each individual or company investigated, according to the firms.
“Basically you don’t want managers to have distractions that will impact their decision making,” said Michael Dubin, president of New York-based The LongChamp Group Inc., which allocates client money to hedge funds.
Background searches helped Cole Partners Asset Management LLC stay away from managers that were later found to have had run-ins with regulators, said Rian Akey, chief operating officer of the Chicago-based firm, which channels money into hedge funds.
Akey said a check done three years ago on a New York-based hedge fund found that in 1999 the managers had paid fines amounting to $500,000 for violating trading rules. “That was enough to put us off,” he said, declining to name the fund.

Posted by on March 23rd, 2009 at 12:36 pm


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