...a Frenkel & Co., Inc. Company

Frequently Asked Questions

Question: What are the typical claims made against hedge funds?

Answer: Typical claims made against hedge funds, investment advisers, and their respective directors/partners/members include:

  • Mismanagement
  • Misstatement
  • Negligence
  • Misrepresentation made in the PPM or other communication
  • Fraud
  • Breach of duty
  • Failure to supervise the investment adviser
  • Failure to perform adequate due diligence in evaluating potential investments
  • Failure to provide adequate disclosure of the investment risks involved
  • Investing in assets or using strategies not mentioned in the PPM
  • Failure to follow investment guidelines
  • Failure to properly value assets
  • Failure to invest
  • Failure to redeem investor funds in a timely and orderly manner
  • Manipulation or misrepresentation of historical performance
  • Excessive fees
  • Contracting with substandard vendors/submanagers
  • Conflicts of interest / related party transactions
  • Claims against individuals serving as directors on the boards of portfolio investments
  • Claims by the SEC or state attorneys general or other regulatory body alleging violations of rules or statutes. It is important to note that coverage under some E&O/D&O policies can only be triggered by the filing of a notice of charges, formal investigative order or similar document.
  • Market timing / Late trading
  • Claims made by employees alleging discrimination, sexual harassment, or wrongful termination

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Copyright © 2009 Frenkel & Co., Inc.

Hedge Fund Insurance
a division of Frenkel & Co., Inc.
350 Hudson Street, 4th Floor, New York, NY 10014
Phone: 212-488-0270  Fax: 212-488-0432