Large investors are hiring private investigators to examine hedge funds to avoid fraudulent or bad investments, according to the New York Times. With more and more hedge fund scandals and collapses, the business is in demand. Private investigator Randy Shain runs the investigative unit at First Advantage. The group consists of 50 investigators dressed causally who work out of a cubicle-less office in the Flatiron district in Manhattan. The investigations are costly and a report can run $2,500 to $50,000, depending on the depth, Shain said.
The group--which has examined more than 3,000 funds and 4,500 hedge funds--looks at court filings and news clippings, checks criminal records and interviews former business associates. They can provide a comprehensive report on an individual in about five weeks.
The majority of the managers Shain has looked at over the past 19 years have clean records and his experience is that most hedge funds fail because the job is hard. He believes that character is an important quality to examine. Small details such as whether an individual has failed to pay rent, lied about academic achievements, or fudged a gap on a resume, can provide useful insight. A manger that makes frequent and questionable donations to charity could be in trouble as well as a manager who sues their gardener over a trivial manner.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summariesprepared.