A Stern look at hedge fund risk
Abstract
Purpose
This paper aims to give an overview of the English law position on potential liability for misstatements and claims which investors may be considering.
Design/methodology/approach
The paper discusses liability for information contained in prospectuses, where liability for misrepresentation can arise, various possible remedies for investors, how criminal liability for misrepresentation can arise, and how hedge funds can protect themselves from misrepresentation claims.
Findings
A recent study by the Stern Business School found that 42 per cent of a group of over 400 hedge funds had either misrepresented information to investors or provided information that was inconsistent with material obtained from other sources.
Practical implications
The Stern Business School report is a timely reminder that all communications to investors, however informal, should be carefully verified and consideration should be given as to how pronouncements on future performance or investment opportunities are couched.
Originality/value
The paper provides practical guidance from experienced financial institution and securities lawyers.
Keywords
Citation
Kosky, J., James, S. and Carty, H. (2010), "A Stern look at hedge fund risk", Journal of Investment Compliance, Vol. 11 No. 1, pp. 32-34. https://doi.org/10.1108/15285811011030185
Publisher
:Emerald Group Publishing Limited
Copyright © 2010, Emerald Group Publishing Limited