Can a Hedge Fund Manager Live at an Investment Property?
If a hedge fund decides to invest in luxury real estate, is the hedge fund manager allowed to use it as his primary residence/beach house until it is sold?
It sort of creates a conflict of interest and the property could be rented out in between the time it is purchased and sold, but if the house sells for more than the purchase price and/or the fund outperformed the market, I don't see how investors can be angry.
Does anyone know the legality of this type of situation?
Put yourself in the investor's shoes.
You give the HF manager 1MM, and he buys a house to live in. The house belongs to you, yet he's charging you fees, commissions, and he gets to live in YOUR house while it appreciates/depreciates. This would never happen.
But what if the fund has $200 million under management and $1 million of it goes to an investment property? In all honesty, if I was one of the investors, my main concern would be outperforming the market. If the guy does well, I wouldn't care about 0.5% of my money being tied up in an investment property. If he under-performs the market, he is getting quite an angry phone call.
Bernie Madoff was "outperforming" the market and made some extravagant expenditures with investor capital. Is this hypothetical, or were you planning on hittin' up Gucci and Rolex to find some "investment opportunities?"
Hypothetical. Btw, making billions disappear and living in an investment property aren't exactly on the same level.
I was simply asking if this was legal or not.
Thanks SirPoopsaLot.
Btw, I wasn't seriously considering to actually doing something like this. Plus I'm not a HF manager yet. Lol
PS: It seems like self-dealing has a lot of grey areas.
What about Halliburton getting all those big contracts in Iraq?
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