Short of outlawing hedge funds, there isn’t too much the govt. can do to stop this type of swindle.
The thing that attracts people (and capital) to America is the freedom to invest and to prosper.
The desire for big big returns on capital is the reason people just willingly hand over their money to a ‘famous’ hedge fund manager like Bernard Madoff.
Like with everything else, greed is a killer.
There are honest hedge funds. Not many of them launched in the last 10-15 years or so, but alot of the older guys have solid, performing, honest funds.
A hedgie is just someone who puts your money out there at higher risk. That is it. The problem is that many funds (mine included) have to trade offshore or you will get RAPED by the IRS. Allow the same tax protection as an IRA/Keogh/annuity, and you could demand more oversight.....
Of course the "oversight" of the SEC in the last 10 years or so has been an absolute complete freaking joke. I swear, they might as well put up a flashing neon sign saying "CROOKSRUS" and those nimrods at the SEC would not know their butts from a hole in the ground.
If you ever are at an event and some SEC rep is speaking, you can stop the show by asking him to tell you about the most successful prosecution of regsho they have ever done.
Simple logic should have prevailed: If it seems too good to be true, it is.