A hedge fund is an umbrella investment vehicle within which investments are made. Investors invest in the hedge fund and the hedge fund makes its own investments. Hedge funds invest in structured products and principal-protected notes, stocks, bonds, options, commodities, interest rate swaps and a range of derivatives, private placements, and illiquid assets.
Over the past five years, many investors were told that hedge funds were safe — that they were “a hedge against losses.” That is not always the case. Hedge funds can make enormous gains in value but by nature, they subject investors to an enormous risk of loss, often without any safety strategies in place.
Failing to Communicate the Risks of Hedge Funds
The securities fraud attorneys at Dimond Kaplan & Rothstein, P.A. (DKR) pursue securities arbitration claims for investors seeking to recover investment losses they suffered from unreasonable risk exposure investing with hedge funds.
Contact a lawyer experienced in hedge fund fraud cases at our Miami, Los Angeles, New York, Detroit, or West Palm Beach law office for a free initial consultation. We represent investors in California, New York, Florida and around the country in securities arbitration and securities litigation, including hedge fund fraud cases.
Hedge funds cases are often quite complex because hedge funds are different from other investment companies in several ways:
- The hedge fund manager can invest in anything and is not under any obligation to tell you what the fund has invested in. It can be very difficult to get information.
- Unlike a mutual fund or a stock, the hedge fund can deny your request to get your money out of the fund.
Determining If You Have a Case
Just because you lost money in a hedge fund, that does not mean you have a case. Your losses may be commensurate with the market as a whole. A more appropriate question to ask is whether as an investor you should have been subjected to that market. For example, if you are retiree living on fixed-income a hedge fund is an unsuitable investment vehicle for you.
The prospectuses for hedge funds generally disclose vast amounts of often difficult-to-understand information. Investors often must look to their broker for an explanation. Typically a broker will highlight a few bullet points, which often creates a misleading impression of the safety, or more usually the lack of safety, of the fund.
This is, in essence, hedge fund fraud. Materials facts are not properly disclosed at the point of sale or are contrary to what the prospectus says. If this occurred when you were sold a hedge fund investment, you may be able to bring a claim.
Our goal is to help our clients recover financially from investment losses they suffered due to dishonest brokerage firms and negligent stockbrokers. Our securities lawyers have represented clients’ who suffered hedge fund investment losses, including in such hedge funds as Citigroup’s Falcon and MAT funds.
Maximum Recovery of Your Investment Losses
For a free initial consultation about whether stockbroker and brokerage firm disclosure practices contributed to inappropriate investment losses in your account, contact an experienced securities fraud lawyer at DKR. Call 888-578-6255 today or fill out the form below to discuss your claim and review your rights and options with an experienced attorney.