Mon Feb 2, 2009
Most of Bernard Madoff's capital came from hedge funds, who investors say failed to do the most basic due diligence. Could the big players have been willfully blind?
Most of Bernard Madoff's capital came from hedge funds, who
investors say failed to do the most basic due diligence. Could
the big players have been willfully blind?
By Josh Friedlander
The self-professed Ponzi scheme of Bernie Madoff ensnared a
huge swath of wealthy but painfully unsophisticated investors,
as the 8,000 insurance claim forms mailed to Madoff victims
from the Securities Investor Protection Corp. can attest. Yet
his biggest marketing efforts were by proxy, with nearly $20
billion concentrated at five firms, the biggest of which was
Fairfield Greenwich Group.
While Madoff did not, technically, manage a hedge fund, his
largest investors did, and Madoff was their de facto portfolio
manager. These intermediaries have already claimed they were
duped by Madoff, but their own potential liability (both civil
and criminal) is a complicated legal quandary. Even if they
prove themselves right under the law, common sense presses the
ISSN: 2151-1845 / CDC10004H
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