By Sam Ro
Fraudulent funds might outperform their benchmarks significantly or post steady returns during volatile periods, reports The Wall Street Journal’s Jean Eaglesham and Steve Eder.
At least outstanding returns are what the crooked funds often report to their clients, at least. (Don’t forget, Bernie Madoff wasn’t really posting those steady annually gains he boasted about).
In any event, the SEC’s finally on to this, and it’s using computers to spot likely swindlers.
According to the WSJ’s report
The hedge funds have one thing in common: Their performance seems too good to be true, with some trouncing the overall market and others churning out modest results without ever suffering a down month. Some funds on the list stumble but still always outperform rival hedge funds.