Quote:
Originally Posted by Slava
Well the issue with Hedge Funds in general is that you don't know what you are investing in. They are largely covered in a shroud of secrecy and you can't get a handle on what they actually hold. Mutual Funds though are very different; you can find out what you're investing and they are actively managed as well.
Its also commonplace for companies to use their star managers as well other managers to run certain portfolios. I don't really agree with this practice, but that is another issue entirely again!
I agree that the SEC dropped the ball here, but they had investigated the guy over the years and as Bertuzzied said previously he was the former head of the Nasdaq. I think that the disappointing thing is that no one else has been pin-pointed in the investigation yet....clearly you can't pull off $50 Billion on your own!
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That will change with Hedge funds as they will soon be forced to disclose what they are holding. They used to market hedge funds claiming that they would still make money when the market is going down and we all know after last year that this is definitely not the case. A lof of people are being exposed here right down the line and it all starts with the SEC. Clearly changes are needed and the SEC is like an old boys club. Not surprising with the ties between the Nasdaq and Madoff and the tech bubble and the poor performance of investment funds. The whole system needs fixing and disclosure and education to allow for greater DD is a good place to start.