Hedge funds are bracing themselves for a raft of more stringent requirements by investors and increasing regulatory scrutiny, following the revelations this month that up to $50bn has been lost through alleged fraud by Bernard Madoff.Half a dozen lawsuits have been filed by Madoff investors, mainly focusing on the failure of due diligence by the middlemen, such as hedge fund of funds, which channelled money to Madoff. The affair is likely to lead to a crackdown on due diligence by fund of funds - which hold more than 40 per cent of hedge fund money - according to hedge fund marketers and advisers. One hedge fund adviser, who looked into investing with Madoff and declined, said: "This is just the start. Third party administrators, greater transparency in investments, more regulatory oversight - we can expect them all."
Half a dozen lawsuits have been filed by Madoff investors, mainly focusing on the failure of due diligence by the middlemen, such as hedge fund of funds, which channelled money to Madoff.
The affair is likely to lead to a crackdown on due diligence by fund of funds - which hold more than 40 per cent of hedge fund money - according to hedge fund marketers and advisers.
One hedge fund adviser, who looked into investing with Madoff and declined, said: "This is just the start. Third party administrators, greater transparency in investments, more regulatory oversight - we can expect them all."
