Low risk of fraud certification will inspire more trust into hedge funds?

Now hedge funds who want to provide the proofs of their honesty to their customers can buy a risk assessment that will certify these financial institutions have low risk of fraud, reports the Reuters blog. For $15,000-$20,000 Protean Fraud Risk Appraisal will use its database of every such financial crime since 1997 to see if a fund shows any suspicious characteristics.

“We’ve evaluated every single fraud and worked out the common areas where fraud has arisen,” partner Nathan Sewell tells.

Certainly, there are no guarantees against such kind of crimes which are often committed by an individual or small group and can be very hard to spot. Still the certification pursues to show a fund has ‘a low fraud risk’.

Such an assertion would surely have highlighted problems at the major hedge fund frauds of recent years, notes Sewell. But it is unlikely that these funds would have called in Protean in the first place, he adds.