From Reuters:
WASHINGTON, Aug. 31 (Reuters) - The Securities and Exchange Commission filed civil fraud charges Wednesday against two executives of KL Group, a hedge fund in Palm Beach, Fla. The S.E.C. charged that Won Sok Lee, Yung Bae Kim and another unidentified defendant "defrauded investors through misrepresentations and omissions concerning the profitability and security of their investments in the hedge funds." The whereabouts of Mr. Kim and Mr. Lee are unknown and they do not have any known legal counsel, according to the S.E.C. senior trial counsel, Scott A. Masel. In March, the hedge fund was shut down and its assets frozen by a Florida judge after the S.E.C. filed a civil action to halt what it described as an $81 million fraud. The March complaint charged that the KL Group, a related trading entity and the KL principals, Won Sok Lee, John Kim and Yung Bae Kim, fraudulently raised over $81 million, attracting investors by using fake account statements showing that the hedge funds were profitable."
Reuters
We know what you are thinking, "so what!"
But there are some good lessons here perhaps not so obvious:
- It is a zero sum game. So inept investors not doing their homework and throwing money at hedge fund scams, provide losses to the winners out there armed with proper strategy.
- Palm Beach is a land of wealth. Here we have people awash in cash and hopefully knowledge who still make mistakes. Big mistakes. Money by itself will never insure success. If you are foolish and greedy in the markets, the markets will punish you.
- Fly by night hedge fund managers promising untold riches with no proof should cause one to pause.
More on hedge fund scams...people never change!
