That a few hedge funds are turning out to be fraudulent is not a great surprise. The moment the good times cease, there's no more momentum to keep the deceit running. In the case of Weavering, which crashed and burned today, it appears to be a fairly straightforward con.
What is surprising is that anyone would have invested in that product in the first place, if they'd done some basic due diligence. After all, isn't it a bit odd for this type of strategy to have such a large trading volume with a Cayman entity, rather than with its brokers?
Amazingly, the auditors of the fund (Ernst and Young) signed off the accounts - including a statement there were no related parties able to exercise significant influence. And yet two swaps were on the books with a notional in excess of 75% of the entire fund.
You'd have thought that after the demise of Arthur Andersen (RIP) in the Enron debacle, the remaining auditor firms would have learnt the lesson.
Posts
Sunday links: it’s never too late
9 hours ago
No comments:
Post a Comment