Illiquid Rappers S04:E01
Pirates of Finance
00:00
What's the Role of Auditors in Illiquid Mutual Funds?
Even liquid mutual funds and ETFs have this issue as well when you're talking about more esoteric derivatives. One of the big examples was a fund called infinity queue, where they were ostensibly trading variant swaps and also correlation swaps,. All of which is non trivial to price. These things might not trade. They're completely OTC. How do you put that in a mutual fund that's supposed to strike daily? Well, there is someone who is responsible for determining the price. And then in theory, auditors are supposed to come in and confirm now every once in a while. Now, this was a case of fraud, where the PM was actually falsifying what the prices were, and then
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