Hong Kong Hedge Fund Shuts After Discovering 'Irregularities'

"The bad news is that there appears to be something going on with that fund," he said. "The good news is that we've been told the others are all right, and that we don't have anything to do with [the CSA Absolute Return] fund."

According to the firm's Web site, the fund is up 2.78% in 2004, and had a 14.45% return last year. It has had positive returns since its inception in 1997, with the best results coming in 1999, when it returned 23.7%. Its worst year was 2002, when it returned an even 9%.

A 0.51% loss for March and a 0.16% loss in April were the only two consecutive losing months in the history of the fund.

A biography on the Web site claims Schmitt was once a senior business manager for the New York Stock Exchange, and helped manage the NYSE Pension Fund. He also managed funds for Citibank, Chase Manhattan Bank, Lehman Brothers and the John Hancock Life Insurance Co.

An NYSE spokesman said the exchange had no record of ever employing anyone named Charles Schmitt.

CSA Absolute Return requires a minimum investment of $250,000 for its A-class shares, and $100,000 for its B-class shares.

Although most individual U.S. investors are barred from investing directly in offshore hedge funds, the Charles Schmitt funds could have American money through family offshore trusts, or investments from tax-free institutions, such as charitable foundations or educational endowments. Many U.S. colleges and universities invest in hedge funds.