5 Signs Your Surefire Hedge Fund Investment Is A Ponzi Scheme

Jan 2 2015 | 5:25am ET

Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi, better known as Charles Ponzi, was an Italian con artist who gave his name to a type of fraud still prevalent today: the Ponzi scheme.

The U.S. Securities and Exchange Commission defines a Ponzi scheme as “an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors.” State and federal financial regulators in the United States uncover a new Ponzi scheme nearly every week.

On the sixth anniversary of the collapse of the granddaddy of all Ponzi schemes—the Bernard Madoff affair—we thought it might be timely to consider some of the warning signs that an investment might not be all it's cracked up to be.

We asked David Kotz, the former SEC Inspector General and author of Why Ponzi Schemes Work and How to Protect Yourself from Being Defrauded for some red flags to watch for when evaluating an investment (and we did a little research of our own to provide some real-life examples).

1 2 3 4 5 6 Next

In Depth

An Interview With Harvest Volatility Management's Rick Selvala

Mar 23 2017 | 5:39pm ET

Several years of extremely low interest rates have pushed some investors into equities...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

Analyzing The Digital Footprint: What Operational Data Can Tell You About Future Risk

Mar 30 2017 | 3:38pm ET

Advances in technology and increasing operational complexity in search of higher...

 

From the current issue of