Money managers under the microscope
Fraud – a booming business
Fraud is booming as financial pressures rise during the recession, according to PricewaterhouseCoopers, which last night hosted a meeting of its ‘Fraud Academy’, which aims to help companies share tips on spotting those up to no good.
“I think more frauds are going to be disclosed as we roll forward. During the last recession there were a number of companies teetering on the brink and I think there will be more insolvencies containing fraud.”
Only last week Reuters revealed that the Serious Fraud Office had arrested two men in connection with its probe into collapsed hedge fund Weavering.
And learning from the United States, where hedge-fund fraud has been more common, the agency is stepping up its vigilance on hedge funds by developing a system of ‘red flags’ to help it spot hedge fund fraud.
While UK-based managers, for instance, are well regulated, the funds are less closely supervised, and structures such as gates and suspensions could in theory help keep a fraud hidden for some time.
There may not be another one on the scale of Madoff for a while, but, if PwC are right, fraud is likely to be in the news for some time yet.