Wednesday, October 26, 2011

Endless Supply of Fools

In the category of believe it or not, I am just dumbfounded that people continue to give money to "hedge fund managers" without doing the least bit of due diligence on their background. The latest supply of fools apparently invested at least $1.7 million dollars, before the SEC stepped in and put a halt to the alleged fraudulent behavior. Supposedly, this hedge fund manager told his victims that he graduated from Harvard and also got his graduate degree from Harvard. Truth be told, he flunked out of Harvard and had to withdraw because of failure to perform academically. He was only at Harvard for 3 semesters. Hardly enough time for both an undergraduate and a graduate degree.

This piece of work implied to investors that he was managing as much as $16 billion dollars, Ernst & Young served as the fund's auditor, Credit Suisse served as the fund's prime broker and custodian and the fund was a business incorporated under the laws of the British Virgin Islands. He promoted his fund as an offshore hedge fund. All of these fraudulent claims can be verified if you took the time to investigate. How many of your friends have Credit Suisse as their custodian? That in itself is a big clue. The British Virgin Islands has a web site where they list the businesses that are domiciled on their islands. Noticeably absent is guess who?

He was selling the sizzle. Once again an endless supply of fools lined up and gave this piece of work their money. They can forget about getting much if any of it back. I do not feel the least bit sorry for them. They were fools to invest with this piece of work. Luckily, the regulators stepped in before this piece of work could steal more money.

It may surprise you to learn that you can actually very easily find out about this guy's background with a few simple web searches. The smart investors do the work. They check the backgrounds of the people that they do business with before investing. The endless supply of fools do not.

The moral of the story is check the background of your financial advisor. If you need help doing so, call me at 904-262-0888. If you are at a computer when you call, I can walk you through the process. It is not hard and only takes a few minutes. You can risk it if you want to, or you can be smart and protect yourself.

 Be a fool or be smart. It is your choice.