Madoff With a Fortune In Other People's Money
There are a few articles in the Weekend Journal about the Bernard Madoff Ponzi pyramid scheme, in which Madoff allegedly duped investors out of some $50 billion. This one talks about Madoff's private nature and inscrutable "investing" strategy. This details the sad story of former Fort Lee, NJ mayor Burt Ross. This lists numerous other victims of Madoff's scam, including major names, hedge funds, companies, non-profits, and foreign investors.
It's incredible that this could happen. For all of these people - independent investors, fund managers, charity organizations - to blindly trust Madoff with billions in capital boggles the mind. It goes against the most basic of investment advice: Know what you're investing in. Diversify. It's a combination of greed, delusion - there had to be on some level - and "rolling with the good times" as Madoff brought in high, consistent returns of between 10-12% per year. Forget that these were ludicrous in a declining market, forget that monthly statements from Madoff Securities represented quite literally impossible profits. Investors basked in the ignorant comfort of those fat returns.
A lot of blame to go around beyond Madoff, of course. The SEC didn't investigate Madoff Securities for years until just recently despite evidence and entreaties to do so from several people. And how about these countless funds investing others' money in something that nobody understood? What a disaster.
1 comments:
I am astonished that you find it surprising no one followed up on Madoff beginning long ago. It is outrageous but not the least surprising: folks such as those responsible for doing that investigation would, of course, be so busy with more tractable problems in the industry that they would track that stuff first, and first in the pile would and will always what gets first notice in government work: it has to. Naturally, scandals erupt as a matter of course following up on such neglect, but it is not surprising and not partisan. This is an equal opportunity condition. TGD
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