Hedge funds are actively managed investment institutions and the largest of which often command assets worth billions of dollars. Once used to ‘hedge’ money against the market, nowadays hedge funds cater almost exclusively to the rich and wealthy and command extraordinary fees. With a conflux of power and money, it is not surprising that scandals often rock large hedge funds.

Madoff Investment Scandal, 2008

One of the most infamous hedge fund scandals, former NASDAQ Chairman Bernie Madoff established Bernard L Madoff Investment Securities, LLC and ran a sophisticated Ponzi scheme through the hedge fund. Madoff in December 2008 admitted that his wealth management business was a multi-billion dollar Ponzi scheme. He was sentenced to 150 years in prison in June 2009 for defrauding an estimated $65 billion of investors’ money.

SAC Capital, 2010

Run by Steve Cohen, the hedge fund once commanded $50 billion in assets under management (AUM). A series of raids in its Connecticut and New York City offices were conducted in 2010 by the US Securities and Exchange Commission (SEC) as a part of an insider trading investigation. Eight employees were convicted in 2013 for insider trading.

The Galleon Group, 2009

Founded and run by Raj Rajaratnam, the firm had shut down after Rajaratnam and Rajat Gupta were convicted for insider trading. Investigation by SEC revealed other traders engaging in similar activities and 50 people were convicted or pleaded guilty in connection with the insider…

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