Posts filed under “Legal”

Why Do Fund of Funds Exist

Here’s a question for you: What is the actual purpose of FoF ?

In theory, they are supposed to do the due diligence, the forensic accounting, the deep background checks that ordinary investors cannot.

Then once they identify a group of funds they want to allocate capital too, they are supposed to run the asset allocation (cash bonds stocks).

Beyond that, they should be diversifying across styles, strategies, cao sizes, geographic regions.

Additionally, they are also in charge of maintaining oversight of the funds — watch performance, style drift, etc.

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Now ask yourself this: How many FoF actually do all that? How many FoF did that (competantly) for Madoffs.

Category: Bailouts, Hedge Funds, Investing, Legal

Inside Look: Ponzi Scheme

Hedge Fund Regulation – More Perspective on Madoff’s Alleged $50 Billion Ponzi Scheme

Category: Legal, Video

Culprits of the Financial Crisis

Great graphic ! I won’t link to the very strange article it comes from (it violates my  “No linking to shite policy”)but I liked the graphic above.

Category: Bailouts, Digital Media, Humor, Legal

Bernie Madoff on the Modern Stock Market

Implicated in a $50 billion Ponzi scheme, at a 2007 roundtable discussion with Justin Fox, Ailsa Roell, Robert A. Schwartz, Muriel Seibert, and Josh Stampfli.

These are some excerpts featuring Madoff, recently implicated in a $50 billion Ponzi scheme.

The full video is here

Category: Legal, Regulation, Video

Madoffs Victims

A partial list of Bernard Madoff’s alleged ponzi scam victims Madoff Investor Investor Type Possible Losses Source Fairfield Greenwich Group alternatives firm $7.5 billion firm statement Banco Santander bank $3.5 billion El Pais Kingate Management alternatives firm $2.8 billion Bloomerg News Ascot Partners hedge fund $1.8 billion Wall Street Journal Benbassat & Cie bank $935…Read More

Category: Digital Media, Legal

Madoff Story Smells Funny

I have no special insight into the Madoff story.

However, my spidey sense is tingling.

Consider this: Running a billion dollar Ponzi scheme has to be very time consuming. Running a $50 billion Ponzi scheme by yourself, at age 70?

I don’t think it can be done.

Just generating the phony transaction receipts is a full time job.  How did this son-of-a-bitch do it all by himself? Madoff HAD TO HAVE HELP.

I simply cannot believe he did it himself, all alone. His entire scheme was predicated upon finding another 1% of assets every month to payout to the prior investors. Between raising moeny and running operations, it was more than a 1 man job.

And when the market hit the skids and topped out so fast — it fell much quicker in 2008 than in 2000 — he ran out of manuevering room. Madoff had to know he was going down, and everyone who was working with him — everyone who knew of the scheme — they were going down, too.

So he confessed — TO HIS SONS. AND THEY TURNED HIM IN.

And Bloomberg reports they are already represented by Martin Flumenbaum, a lawyer.

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Maybe I’ve read one too many detective novels, but consider this strictly hypothetical, based on-no-facts whatsoever, wildly imaginative hypothesis: If I were running a $50 billion Ponzi scheme, I would have to bring in someone close to help me with it.

Who is closer than my family?

When it became clear there was no where else to turn, instead of bringing down the entire dynasty, I would have them turn me in, to protect the family and what left of the legacy.

I would take the fall so they wouldn’t have to.

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As I noted, I have no special facts, no insight into this what-so-ever.  Other than the story we have been fed so far doesn’t make any sense.

Who was Madoff’s accomplices? I have no idea, but there has to be some! If I were the SEC, I would be looking over close friends and family closely. Very, very closely.

Read More

Category: Credit, Legal, Markets, Regulation

NYT: Don’t Forget Shumer’s Role in the Mess

“Since the financial meltdown, people have been asking, ‘Where was Congress? Why didn’t they see this coming? Why didn’t they provide better oversight?’ And the answer for some, including Senator Schumer, is that they were actually too busy pursuing a deregulatory agenda. Their focus was on how we have to lighten up regulation on Wall…Read More

Category: Bailouts, Corporate Management, Legal, Markets, Regulation

Be Wary of Serial Correlation

MIT’s Andrew Lo: The key concept here, developed by MIT professor and noted hedge-fund theorist Andrew Lo, is “serial correlation.” Simply put, serial correlation is the degree to which each month’s returns in a fund mirror the results of the month before. A fund that returns the exact same amount every month is perfectly serially…Read More

Category: Hedge Funds, Legal, Markets, Mathematics, Quantitative

Inside Wall Street’s Madoff Scandal

A “Giant Ponzi Scheme” – Interview with Aksia CEO Jim Vos: Advised Clients Not to Invest with Madoff

Bloomberg:

WSJ:

Category: Legal, Video

History Lesson: Madoff tops charts; skeptics ask how

> Go to NakedShorts and read the entire 2001 article of the various ways some people challenged the Madoff story: > If it sounds too good to be true… > UPDATE: Paul points to this Barrons story from 2001 Don’t Ask, Don’t Tell Barron’s MAY 7, 2001 http://online.barrons.com/article/SB989019667829349012.html >

Category: Legal, Regulation