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The problem is that when hedge funds get in trouble they do not go to jail, are not prohibited from doing business and the penalties (fines) are ineffectively w

The problem is that when hedge funds get in trouble they do not go to jail, are not prohibited from doing business and the penalties (fines) are ineffectively weak. Given the track record of holding the powerful accountable is terrible, I don’t think this is directed at hedge funds but is a warning to the little people.

SpicyLemonZest 6y ago
It’s common for hedge funds (and more importantly, the people who run them) to be prohibited from doing business. “Barred from the securities industry” is the term typically used if you’re looking for examples.
- newsclues 6y ago
  True. But why does this sort of thing seem to be the norm? https://en.m.wikipedia.org/wiki/S.A.C._Capital_Advisors https://en.m.wikipedia.org/wiki/S.A.C._Capital_Advisors
dcolkitt 6y ago
> The problem is that when hedge funds get in trouble they do not go to jail Criminal prosecution is held to a much higher evidentiary standard than civil fines. Almost all market related crimes, including manipulation and insider trading, require mens rea. Proving state of mind beyond a shadow of a doubt is really difficult to do. Especially when the defendant is sophisticated enough to know the law and have access to high-quality legal advice. Any US Attorney would absolutely love to have the feather in his cap of sending a billionaire hedge fund manager or investment banker to prison. Hell, the reason Rudy Giuliani is a household name is because he managed to do that. But no prosecutor is going to bring a case that he has no chance of winning. Given that it makes much more sense to target enforcement with civil fines rather than criminal prosecution. You can tie up your resources to fight expensive, hard to prosecute criminal cases. Or you can quickly settle for reasonable fines, and cover many more cases with the same set of limited resources.

SpicyLemonZest 6y ago

It’s common for hedge funds (and more importantly, the people who run them) to be prohibited from doing business. “Barred from the securities industry” is the term typically used if you’re looking for examples.

newsclues 6y ago
True. But why does this sort of thing seem to be the norm? https://en.m.wikipedia.org/wiki/S.A.C._Capital_Advisors https://en.m.wikipedia.org/wiki/S.A.C._Capital_Advisors

dcolkitt 6y ago

> The problem is that when hedge funds get in trouble they do not go to jail Criminal prosecution is held to a much higher evidentiary standard than civil fines. Almost all market related crimes, including manipulation and insider trading, require mens rea. Proving state of mind beyond a shadow of a doubt is really difficult to do. Especially when the defendant is sophisticated enough to know the law and have access to high-quality legal advice. Any US Attorney would absolutely love to have the feather in his cap of sending a billionaire hedge fund manager or investment banker to prison. Hell, the reason Rudy Giuliani is a household name is because he managed to do that. But no prosecutor is going to bring a case that he has no chance of winning. Given that it makes much more sense to target enforcement with civil fines rather than criminal prosecution. You can tie up your resources to fight expensive, hard to prosecute criminal cases. Or you can quickly settle for reasonable fines, and cover many more cases with the same set of limited resources.