SAC Capital is a 鈥渃lassic example鈥� of a hedge fund with a performance that was 鈥渢oo good to be true,鈥� says , a finance professor at 菠萝视频鈥檚 Owen Graduate School of Management.
The giant hedge fund agreed to plead guilty to criminal charges of insider trading Nov. 4 and pay a $1.8 billion fine. Six former SAC employees have pleaded guilty to insider trading and two others are fighting similar charges. SAC is run by billionaire Steven A. Cohen.
Bollen can talk about how to spot potential hedge fund cheaters.
鈥淚n a 2012 study of hedge fund fraud cases, I found that the probability of a trading violation had a strong positive correlation with the level of a fund鈥檚 returns,鈥� Bollen says. 鈥淭hus it is not surprising that a firm delivering 30 percent per year for two decades was generating at least some of those returns using inside information.鈥�
Bollen laid out some tips to catching hedge fund cheaters in a 2011 .