The former chairman of the Nasdaq stock market has been arrested and charged with securities fraud, in what may be one of the biggest fraud cases yet.
Bernard Madoff ran a hedge fund which ran up $50bn (£33.5bn) of fraudulent losses and which he called "one big lie", prosecutors allege.
Wow. Even more interesting is the bit about how he made the thing work -
According to the US Attorney's criminal complaint filed in court, Mr Madoff told at least three employees on Wednesday that the hedge fund business - which served up to 25 clients and had $17.1bn of money under management - was a fraud and had been insolvent for years, losing at least $50bn.
He said he was "finished", that he had "absolutely nothing" and that "it's all just one big lie", and that it was "basically, a giant Ponzi scheme", the complaint said.
For 'Ponzi', read 'pyramid'. That's all this was - a pyramid scheme - yet he had $17bn under management. Wow again.
5 comments:
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What's more intersting is that hedge funds have always claimed they can be aggressive and take higher risks because their investors are wealthy and know what they are doing - "grown ups" is what I heard one fund manager call them.
In which case you would have expected a high level of due diligence.
I heard on the radio that even Nicola Horlick had some of her funds invested.
Yes you're quite about Nicola Horlick, which says a lot in itself. If you can't rely on a professional fund manager to tell a genuine investment vehicle from a pyramid scheme then something really is rotten in the system.
My sentiments exactly, Tom
what's an individual investor to do ? - implications for NuLab policy as well as us capitalists
This has to be an outlier (surely?!), but it does raise quite a few questions dunnit. I notice Bramdean has tried to blame the regulatory regime.
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