Small number of cases despite ease of mis-pricing

The ability of fund managers to intercept statements from their prime brokers on the securities traded can lead to manager fraud.

Joe Press, partner at Ernst & Young with 34 years' auditing experience, said the lack of obligation for prime brokers to reconcile their statements with the fund's trading records adds to the problem.

As a result, auditors always reconcile trading statements, from the fund itself to the prime broker's statements as a way of counteracting the possibility of fraud, he

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