Hedge Fund Fraud

The recent surge in the popularity of hedge funds has given rise to an increase in the amount of litigation among and between funds, their investors, and government regulators. Hedge funds may be loosely defined as private investment funds open to a limited range of investors. They are often viewed as risky investment vehicles which can produce high rates of return. The most common investment practices used by hedge funds include Short-selling, derivative contracts, and the use of leverage. Short selling investors usually expect a decline in the price of a financial investment. They often buy stocks “on margin” and later return them to the lender at a lower price. Some observers have alleged that short-selling hedge funds are largely responsible for the recent decline in the US markets.
Short-selling in itself is a common investment strategy and is not a crime, however if short sellers attempt to drive down the share price of a given stock through activities such as spreading false rumors or acting on material non-public information (Insider Trading), such activity becomes illegal. Experience hedge fund attorneys know the difference and can help you to mount an aggressive legal defense.