This paper analyses the organisational and regulatory structures, policies and laws of the funds management industry and their effectiveness in the prevention of fraud. The allocation of legal liability between the various entities within fund management corporate structures reveals that in practice, the fund managers use offshore hedge funds to reduce legal liability. Investing in offshore funds exposes retail investors to regulatory risks due to the less rigorous regulatory regimes and the difficulty of recovering funds from certain jurisdictions in the event of fraud, misconduct or the failure of a fund. The specific cases of fund management fraud in Australia, Canada, the United Kingdom and Unites States were examined in order to analyse how the fraud occurred, how the fraud was uncovered and the effectiveness of the regulatory arrangements in detecting and sanctioning the specific instances of fraud. This study identified several fraudulent practices such as operating outside investment guidelines, misleading public documents, inconsistent asset valuations and poor corporate governance. Finally, this study proposes reforms to the organisational and regulatory structures of the funds management industry in Australia by drawing on policy considerations and examples of successful reforms that have helped to minimise or prevent fraud in other jurisdictions. These reforms include a strict approach to penalties imposed on those responsible for the fraud, full disclosure of details of structure and risks involved in offshore funds management to alert investors and regulators, ensuring independence and robust investigations to ensure the integrity of the compliance role of auditors and custodians, improving collaboration between industry professionals and regulators, re-characterisation of retail and sophisticated investors in the context of offshore investments by superannuation funds, and a tighter regulatory oversight for limiting fraudulent conduct in the market.