Blind Pool Fraud

Blind pools, which were popular in 1980’s and 1990’s amidst the tail end of the bull markets during these periods, are limited partnerships with no state investment strategy, goals, or process.  Today, a variation of the now vilified blind pool is known as a “blank check offering” or a “blank check underwriting”.  In a blind pool or any variation of it, the general partner or partners gather capital from investors, who entrust the general partners to invest in the pool’s best interest. 

How They Work

Investors in blind pool have limited abilities to evaluate an entity prospectus, let alone detailed accounts, because in most cases, there is none at the beginning.  Essentially, these are blind faith investments by investors with a general partner convincing them of their ability to ethically manage the fund and return rewards on investment.  Commonly, blind pools are utilized in reverse acquisition, which is intended to make profits from taking one entity involved public without scrutiny of IPO regulations.  Clearly, investors are taking an inordinate amount of risk in these investments, and in the past, numerous instances of blind pool fund fraud has occurred, including ponzi schemes, excessive fees and partner compensation, insider trading, and other fraudulent practices.

Blind Pool “Offerings”

Blind pools and blank check offerings must register with the SEC, and in turn, must adhere to certain SEC guidelines, which at the very least will include fiduciary duty to investors.  If this fiduciary duty is breached and losses are incurred, investors should file claims with the SEC and take legal action to recoup their losses.  Additionally, if fraudulent means are used to obtain initial investments, including omissions, misrepresentations, and other fraud, investors also have grounds for filing claims against the liable parties.

Legal Help

If you have lost money due to investments in blind pools or blank check underwritings, contact a securities fraud attorney to begin the legal process of filing your claims and recouping the costs of your damages.