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ppauper
Topic Author
Posts: 70239
Joined: November 15th, 2001, 1:29 pm

### hedge fund ponzi scheme

$50bn fraud charge at hedge fundanyone here involved in this ?Bernard Madoff ( former chairman of the Nasdaq) ran a hedge fund which ran up$50bn (£33.5bn) of fraudulent losses

daveangel
Posts: 17031
Joined: October 20th, 2003, 4:05 pm

### hedge fund ponzi scheme

wow - this is unf*cking believable
knowledge comes, wisdom lingers

Paul
Posts: 10791
Joined: July 20th, 2001, 3:28 pm

### hedge fund ponzi scheme

Not surprising that someone should try to do this. Surprising (or at least it was once surprising) that there don't seem to be any auditors etc. stopping this happening.What was the name of the fund?P

Posts: 23951
Joined: September 20th, 2002, 8:30 pm

### hedge fund ponzi scheme

Yes, some people thought that Madoff's returns were far too smooth and now we know why.It's just another example of how rewards for stability lead to increasing risk-taking behavior. The less risky something seems, the more risky it really is.
Last edited by Traden4Alpha on December 13th, 2008, 11:00 pm, edited 1 time in total.

daveangel
Posts: 17031
Joined: October 20th, 2003, 4:05 pm

### hedge fund ponzi scheme

there were a number of feeders into the Madoff operation - FFG Sentry was one of them. I think there were plenty of auditors etc - hard to believe that this was pulled off.
knowledge comes, wisdom lingers

Martinghoul
Posts: 3256
Joined: July 18th, 2006, 5:49 am

### hedge fund ponzi scheme

QuoteOriginally posted by: daveangelthere were a number of feeders into the Madoff operation - FFG Sentry was one of them. I think there were plenty of auditors etc - hard to believe that this was pulled off.Hmmm, not so sure about the auditors. This out of the BBG article:"...Madoffs auditor, Friehling & Horowitz, operated from a 13-by-18-foot office in Rockland County, New York. Vos had an investigator stake out the office. A call to the New City, New York, office of Friehling & Horowitz after business hours wasnt returned"

daveangel
Posts: 17031
Joined: October 20th, 2003, 4:05 pm

### hedge fund ponzi scheme

QuoteOriginally posted by: MartinghoulQuoteOriginally posted by: daveangelthere were a number of feeders into the Madoff operation - FFG Sentry was one of them. I think there were plenty of auditors etc - hard to believe that this was pulled off.Hmmm, not so sure about the auditors. This out of the BBG article:"...Madoffs auditor, Friehling & Horowitz, operated from a 13-by-18-foot office in Rockland County, New York. Vos had an investigator stake out the office. A call to the New City, New York, office of Friehling & Horowitz after business hours wasnt returned"I think that referes to the auditors of Madoff's business rather than the funds' auditors.
knowledge comes, wisdom lingers

2face
Posts: 3
Joined: June 29th, 2008, 6:51 am

### hedge fund ponzi scheme

Hit big namesBNP..Nomura.. especially my favorite Man Group Now i understand what they mean when they say they follow sophisticated alternative investment strategies

Alan
Posts: 10270
Joined: December 19th, 2001, 4:01 am
Location: California
Contact:

### hedge fund ponzi scheme

From what I have read so far, the lesson here is pretty clear for investors: youshould -never- let your money manager also have custody of the assets. You want a reliablethird party custodian who also values the portfolio.

ppauper
Topic Author
Posts: 70239
Joined: November 15th, 2001, 1:29 pm

### hedge fund ponzi scheme

'PONZI SCHEME' AT CITI

PaperCut
Posts: 1616
Joined: May 14th, 2004, 6:45 pm

### hedge fund ponzi scheme

QuoteOriginally posted by: ppauper'PONZI SCHEME' AT CITIOh my

PaperCut
Posts: 1616
Joined: May 14th, 2004, 6:45 pm

### hedge fund ponzi scheme

QuoteOriginally posted by: AlanFrom what I have read so far, the lesson here is pretty clear for investors: youshould -never- let your money manager also have custody of the assets. You want a reliablethird party custodian who also values the portfolio.Yeah that seems very wise.

acastaldo
Posts: 1416
Joined: October 11th, 2002, 11:24 pm

### hedge fund ponzi scheme

QuoteOriginally posted by: AlanFrom what I have read so far, the lesson here is pretty clear for investors: you should -never- let your money manager also have custody of the assets. You want a reliable third party custodian who also values the portfolio.Yes. And this is the way major hedge funds are usually set up, with a management company (e.g. S0r0s Fund Management) completely separate from the administrator/custodian (e.g. Bk of New York). The administrator receives trading statements daily directly from the broker and is responsible for receiving/paying out customer funds. The management company makes all the buying/selling decisions. Investors should insist on this dual structure which, AFAIK, has never resulted in a fraud.The problem at M@doff was that the management company and brokerage/custody were not truly separate, as they were controlled by the same person.

BullBear
Posts: 860
Joined: August 18th, 2007, 8:33 pm

### hedge fund ponzi scheme

QuoteOriginally posted by: Traden4AlphaYes, some people thought that Madoff's returns were far too smooth and now we know why.It's just another example of how rewards for stability lead to increasing risk-taking behavior. The less risky something seems, the more risky it really is.There was also a kind of "ponzi scheme" on Banks. Banks were also managing and smoothing earnings...Banks earnings were (some still are) far too smooth. and they are all bankrupt [technically if it were not for taxpayer's money]... Guess who are the Auditors?

Posts: 23951
Joined: September 20th, 2002, 8:30 pm