This is quite clearly a massive and embarrassing foul-up for Bramdean, so it is good that an outfit that has piled its clients' money into a pyramid scheme knows who is to blame:
The allegations made appear to point to a systemic failure of the regulatory and securities markets regime in the U.S. ... This apparent failure raises fundamental questions about the regulatory system under which this has happened and no doubt this will be the subject of intense debate as the facts emerge.
This sort of pin the blame on the regulators approach appears to be becoming increasingly common in the financial world.
I would have thought 'ensuring that a major investment is not a pyramid scheme' would be taken as a given by most clients. Notably they do claim that due dilligence was done, but not by them it appears:
The Madoff business has been subject to due diligence by many of the most experienced professionals in the global markets, including our own advisers RMF Investment Management – Nassau branch, which is part of MAN Group.
So, Bramdean is blaming the regulators for failing to spot the wonkiness of a fund they voluntarily put their clients' money in, plus they suggest that they left due dilliegence up to a third party, despite the fact that this represented 10% of their alternatives portfolio. I know I'm just a simple lefty, ignorant of the ways of the City, but what does Bramdean actually do for its management fee if kicking the tires of a fund that accounts for 10% of one of its portfolios isn't part of it?