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from the don't-worry-they-got-you-covered dept.
http://www.reuters.com/article/us-platinumpartners-lawsuit-idUSKBN1481BI
Top executives of New York-based hedge fund manager Platinum Partners were arrested on Monday and charged with running a $1 billion fraud that federal prosecutors said became "like a Ponzi scheme" as its largest investments lost much of their value.
Led by Mark Nordlicht, Platinum was known for years for producing exceptionally high returns -- about 17 percent annually in its largest fund -- by taking an unusually aggressive approach to investing and fund management, as detailed by a Reuters Special Report in April. (reut.rs/1TRovwx)
Nordlicht, Platinum's founding partner and chief investment officer, was arrested at his home in New Rochelle, New York. Federal prosecutors accused him and six others of participating in a pair of schemes to defraud investors.
[...] Capers added that the case was one of the largest and "most brazen" investment frauds ever and Platinum was ultimately exposed to have "no more value than a tarnished piece of cheap metal."
Also reported on by Bloomberg here.
(Score: 1, Informative) by Anonymous Coward on Wednesday December 21 2016, @03:30AM
Parent is a good example of the appeal of hedge funds and other out-of-the-mainstream investment vehicles. You have people like Bernie Madoff, or these Platinum people who can tell a good story - almost everyone is investing their money by the books, but I've discovered something really interesting that generates 100x the returns they're getting. In a nutshell, here's how it works: mumble mumble mumble. it's a simple idea, but to execute it properly you need a background in quantitative finance, game theory, chaos theory (etc) like the people on my team. You don't have to invest your entire savings, in fact that's probably not a good idea anyone, but why don't you try a small investment and see what happens.
And of course, a year later that small investments soars by 50 percent or more thanks to Ponzi. So the mark follows with a larger investment, and then he gets greedy and starts dumping his savings into the fund.
(Score: 2) by lgw on Wednesday December 21 2016, @09:22PM
The first guys to figure this stuff out really did make a fortune. There's a great Numberphile interview [youtube.com] with James Simons, the first quant to make a business out of it. But like anything in the stock market, it was gamed quickly - there are systems that beat the market, but there are no old systems that beat the market. Ever since the flash crash it's just trolls trolling trolls.
(Score: 2) by MichaelDavidCrawford on Wednesday December 21 2016, @10:05PM
That's what quantitative finance is called now. You purchase 53 shares of AAPL, then 17 milliseconds later you sell 17 of them.
That's why we really did need to Occupy Wall Street.
Yes I Have No Bananas. [gofundme.com]