Investors Still Don’t Get it!

November 15, 2007 |

Okay, especially high net worth investors — they still seem to get duped by frauds, fakes and posers.  Over the weekend I was having a conversation with someone and they mentioned that a friend they knew was being investigated by the Feds.  I asked why that was because I know the guy getting investigated and he is a smart person.  Well, it seems he invested in a hedge fund a while back and because of that, he is in trouble.  How? 

To make a long story short, this smart business man invested about 250K in a hedge fund and received a return of about 70K — ninety days later!!!  Evidently, he was asked by the hedge fund manager whether he wanted to pull out his money, along with the 70K.  Naturally, he said, yes.  The reason?  Have you guessed it yet? 

The Feds have accused him of being an active member of a Ponzi Scheme.  After all, he did get his money back after only 90 days.  My question was this … didn’t this guy know that most hedge funds have lock up periods for investment capital of a year?  The answer was “evidently not.”  Now, don’t get me wrong.  I hate to see good people get in trouble like this, but I have to wonder where his head was at.  He knew something about hedge funds because he invested in others, so why didn’t a red flag off in his head??

Well, I’ve been telling people, asking people, pleading, etc. for years with my web site Hedge Fund Center — an unbiased online resource for investors to consult – so they don’t fall into the potential pitfalls when investing in hedge funds.  I’d like to put HFC to bed, but evidently, it is still needed!  Another great resource for folks is by a guy named Fred Gehm – check out his site, read it and learn.  That’s all for now.

Comments