The growth of the hedge fund industry in Europe has hitherto been remarkably scandal-free. This contrasts starkly with the US, where there has been a continuing series of blow-ups and frauds – with egregious cases such as Manhattan, Lipper, Lancer, Beacon Hill, Durus, Bayou and Wood River continually cropping up, and keeping the media filled with bad news about hedge funds. But there has always been the risk that, as the industry in Europe grew, problems would sooner or later emerge there too. In recent weeks, with the remarkable goings-on at Absolute Capital Management – a hedge fund management company publicly listed on the Alternative Investment Market (AIM) in London – it looks uncomfortably as if we have our first such scandal.
The recent extraordinary sequence of events arguably began with the abrupt resignation in September of Absolute Capital founder Florian Homm, although no...
