Hedge fund fraud is more common in the United States than it is in Europe because nearly anyone can take a shot at becoming a hedge fund manager as long as they have a Bloomberg terminal and money to start with, CNN/Money reports.
The easiness of entering the industry is what makes it so vulnerable to fraud, something that is almost non-existent in Europe, according to the Alternative Investment Management Association of London.
England's equivalent of the Securities and Exchange Commission, the Financial Services Authority, for example, requires managers to meet certain requirements before starting a hedge fund, something U.S. regulators do not require. In addition, FSA conducts background checks on managers.
Florence Lombard, executive director of AIMA, reported that in 15 years there is only one documented case of hedge fund fraud, while the U.S. has had 20 within the last year.