My old criminal law professor, Loftus Becker, used to challenge the class by posing “hypos” – a hypothetical set of facts from which we were to determine whether a crime had been committed. He’d have liked this one:

Suppose you run a “fund of funds”, collecting $200 million per year to select other hedge fund managers for your clients’ money and then monitoring that manager’s performance.

Suppose that an integral part of one particular manager’s trading strategy was to sell off all securities at the end of each month, park the proceeds in cash or cash equivalents and start the process anew the first day of the next month.

Suppose that, in your role of monitor, you received a monthly statement from that hedge fund manager showing that the proceeds for the preceding month had been placed in the Fidelity’s Spartan U.S. Treasury Money Market Fund.

Suppose that no such fund existed, and had not existed for at least the past three years.

Suppose that, instead of confronting that manager and demanding an explanation, you busied yourself preparing for your annual Christmas jaunt to Mustique and Monica’s trip to a Mexican wedding.

Have you engaged in such reckless neglect that your behavior has gone beyond mere civil liability and crossed the line to criminal fraud?

We’ll soon find out.

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One response to “Hypo

  1. loanshark

    Dangerously close to fraud. Mrs Noel ought to pipe down. Her cluelessness is a bit frightening as it approaches her husband’s money management skills. Aside from the hubris and phony social climbing nature of these folks one would almost feel sorry for them. 14b AUM and this level of incompetence? Hard to believe.