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Hedge Fund’s Italian Raid Leaves Us In the Dark

(Bloomberg) Ten years on from the financial crisis, bank balance sheets haven’t become any simpler to digest for the average investor. Finance firms are big and leveraged; regulations have just become new instruments of complexity. That might suggest a potential windfall for any brainy number-cruncher who’s bored enough to spend a year looking for inconsistencies in the industry’s accounts.

London hedge fund Caius Capital certainly thinks so. It carved out a niche for itself in 2017 when it accused Britain’s mighty West Bromwich Building Society – 750 employees, 9 million pounds ($12 million) in profit – of wrongly classifying debt instruments as core capital. Not exactly the stuff of a Michael Lewis thriller, but it kind of worked. The Midlands firm bought back the instruments before the regulator had made a final judgment on the case. Caius made money.

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