But pass the bail-out pie please! (Ok, they're not asking for that yet)

Hedge funds brace for more rules in wake of Madoff (http://www.reuters.com/article/innovationNews/idUSTRE4BB72J20081212)

Ponzi scheme operating under the nose of the SEC.

If you are too stupid to realize that hedge funds are not investing but are pure out and out gambling, then you deserve to lose your money.

No different than going to Vegas or Atlantic City.

If you are too stupid to realize that hedge funds are not investing but are pure out and out gambling, then you deserve to lose your money.Right, let's all go back to the days of caveat emptor, because after all, fraud victims should have all known better. :rolleyes:

Sometimes I wonder if libertarians realize how utterly stupid they sound, or whether they ever crack open a history book.No different than going to Vegas or Atlantic City.Casinos don't promise solid gains. In fact, they post their payback percentages, which is a guarantee of how much you'll lose over time.

Ponzi scheme operating under the nose of the SEC.

LOL, this is just insane. There are endowments and very rich people (like Martha Steward) that may lose most of their wealth.

The crux of the problem is a lack of disclosure and the inability of others to replicate his strategy. So, why did so many invest with him? He gave 10% returns without a down year regardless of the economy.

So I guess being wealthy perhaps doesn't make you any smarter than the average sub-prime borrower?

Hmm... this guy had some interesting credentials. He was a chairman on the board of NASDAQ.

Everyone invested in this thing, even banks. A whole bunch of Swiss bank, Spanish banks and so on. I think it'll be interesting to see how widespread this is.

Now, if even banks and people who are supposedly trained to understand risks and rewards can't protect themselves from this sort of fraud, why are some of you still clinging to the illusion that these industries don't need regulation?

In the end we all end up paying for this, if only because everyone in the world has lost faith in our ability to handle their money responsibly. No one is going to want to participate in hedge funds because they're so invisible to scrutiny and regulation you can do all kinds of fraudulent things. People are already taking their money out of legit hedge funds because of this.

While many investors were friends or met Mr. Madoff at country clubs or on charitable boards, even more had entrusted their money to professional advisory firms that, in turn, handed it to Mr. Madoff — for a fee. Investors are now questioning whether these paid advisers were diligent enough in investigating Mr. Madoff to ensure that their money was safe. Where those advisers work for big institutions like Banco Santander, investors will most likely look to them, rather than to the remnants of Mr. Madoff’s firm, for restitution.

Full article (http://www.nytimes.com/2008/12/15/business/15madoff.html?_r=1&hp=&adxnnl=1&adxnnlx=1229358067-bNxqjrVVoNbXpptSplq8hQ)

Oh this is a good one:

This from the president of a fund of fund business: "Every time one of these frauds is discovered I get scared to death it could happen to us. We do lots of things to try to ensure it doesn't, such as checking and confirming auditors and auditor changes, using a private investigator to check on managers when we first invest and the having the PI annually update the file, trying to find references which are not on someone's reference list, etc." If big investors like these could be fooled, he said, anybody can be fooled.
http://money.cnn.com/2008/12/15/magazines/fortune/madoff.fortune/

[QUOTE=Panamah]Hmm... this guy had some interesting credentials. He was a chairman on the board of NASDAQ. [QUOTE]

Yea, this guy had exceptional credentials. He was involved in the first electronic trades and gave lectures on the stock market.

The slippery slope for him may have been on the first down year where he goosed his numbers. Then he may have just doctored his accounts after that and after the 40% decline in the stock market. What ended this was overseas redemptions. Once people wanted their money back, the whole thing fell apart.

I think it is very important to diversify and to avoid these fund of funds things. That means no more than 20% invested in a single mutual fund or stock or bond...

Oh definitely, diversification is really important. One of the articles I read today someone had put their entire retirement account into this thing. I wonder if they're getting lead into these things by their financial advisers they hire and pay? Sounds like a lot did. I think ultimately greed can overcome the best of us though. It *is* hard to diversify out of a something that is earning you 12% a year, good economy or bad.

I had to really pinch myself hard to get myself to take some money out of this one fund I had, it was just such a great performing fund for so many years.

Still, due to diversification and laziness (never got around to buying more mutual funds after I consolidated into one, it's in the money market account still) I have only had small losses so far. *knock wood*

Right, let's all go back to the days of caveat emptor, because after all, fraud victims should have all known better. Hedge funds are basically mutual funds for short sellers.
Short selling IS gambling. It is not investing.

Honestly, you at the same time say that people are not responsible for their own stupidity, you say that they are stupid, and that they need to be protected because they are stupid. If you made people responsible for their own stupidity, then you would have less of the second, and would not have to do the third.

Sometimes I wonder if libertarians realize how utterly stupid they sound, Well if being responsible for my own actions, losses and gains, makes me stupid. Then I am stupid, mea culpa.

Stocks are going to drop in price regardless of short sellers. We could have laws to prevent short selling and hedge funds. Stocks will still re-evaluate to what they are worth to investors. Investors.

or whether they ever crack open a history book. I know a lot of history. But I also know that modern day Liberals would try to jail Thomas Jefferson just for his ideology today. Personal freedom and responsibility are the antithesis to modern day Liberals.

Casinos don't promise solid gains. In fact, they post their payback percentages, which is a guarantee of how much you'll lose over time.
Short selling nor hedge funds promise gains. They promise losses. Greater losses than what you actually risk. Everyone knows that.

Hedge funds are basically mutual funds for short sellers.
Short selling IS gambling. It is not investing.It was not a risky investment. It was a Ponzi scheme. They were paying back old investors with the funds coming in from new investors, as if it were a real return, while pocketing a part of the money themselves.

Fraud, plain and simple.

If you walk into a casino and keep pulling on a slot machine because you think you will make money in the long run, you are stupid, and should not be protected.

But if a casino rigs the slot machines so that you can't win, it's fraud, and you should be protected. Even though, over time, you would lose all your money anyway.

Hedge funds are gambling.

He ran a hedge fund that was a Ponzi Scheme.

/shrug.



They are not investors.
They were gamblers.

I don't care if you lose money at an Indian Casino either.
You played, you lost.

Get over it.

Avon and Amway and Candelite are legal Ponzi Schemes too. Who is going after them?

He ran a hedge fund that was a Ponzi Scheme.No, he ran a Ponzi scheme that was masquerading as a hedge fund.

He was just stealing people's money while paying back old investors, to keep the fraud going.

In case you haven't figure it out yet, the "stealing people's money" is the illegal part, not the "risky investment" part.

All I know is my company lost 300 million because of him.

What is really annoying is that the SEC actually audited him and couldn't figure it out.

The Republicans have removed the competency and teeth of the SEC and told them to protect the businesses they're supposed to be watching, not the people who make use of those businesses.

I know a lot of history. But I also know that modern day Liberals would try to jail Thomas Jefferson just for his ideology today. Personal freedom and responsibility are the antithesis to modern day Liberals.Jefferson certainly believed in personal freedom for some (including himself).

I sure hope his ideology would be anathema to us today.

Two years later, the agency closed a separate probe into tips and press reports suggesting his investment returns were too good to be true. Money manager Harry Markopolos helped trigger that inquiry by suggesting Madoff may be running a Ponzi scheme or front-running, in which traders buy shares for their account before filling customers’ orders, a person with knowledge of the case said.
They were tipped off and they still couldn't figure it out? This has a distinctive fish odor to it...

http://www.bloomberg.com/apps/news?pid=20601087&sid=a3.V5Hz3noK4&refer=home

Jefferson certainly believed in personal freedom for some (including himself).

I sure hope his ideology would be anathema to us today.

Jefferson would have seen Madoff imprisoned.

Paine even more so.

BTW, Jefferson attempted, more than once, to change Virginia law regarding slavery and manumission.

Jefferson inherited his slaves...he purchased none, and there were various reasons which worked against his freeing them.

Jefferson inherited his slaves...he purchased none, and there were various reasons which worked against his freeing them.Yeah, if he freed them, whom would be rape and force to do all the dirty work?

Yeah, if he freed them, whom would be rape and force to do all the dirty work?

Rather than reiterate what I have written on here, before, and what has been written by other Jeffersonian scholars, I will post a link (http://www.temple.edu/lawschool/dpost/slavery.PDF) to a particularly good essay on the matter.

I encourage you to read it.

Jefferson was not a perfect person...but he strove to do the right things as best as he could within his era.

A good example of what happens when a person takes a non-pragmatic and non-political approach to attempting to change society for the better can be seen in the life of Thomas Paine. He was one of the finest men of that era with many beliefs ahead of his time...and he ended up so slandered and reviled that it was near a century after his death before non-libellous histories of his life were researched and published. To this day, of the Founders, he is one of the least remembered. Much of his problems and troubles were directly related to his refusal to temper his beliefs or willingness to allow for a slower evolution of societal norms rather than ill-fated social revolution.

Rather than reiterate what I have written on here, before, and what has been written by other Jeffersonian scholars, I will post a link (http://www.temple.edu/lawschool/dpost/slavery.PDF) to a particularly good essay on the matter.That essay concedes that he was a hypocrite. He certainly wasn't the last politician to say one thing in public and do the exact opposite in private.

Not to mention, the essay keeps referring to the Declaration of Independence as though it mandated equality for all, whereas its plain text says the opposite.

aybe the author should actually read the whole thing, before writing about it.To this day, of the Founders, he is one of the least remembered. Much of his problems and troubles were directly related to his refusal to temper his beliefs or willingness to allow for a slower evolution of societal norms rather than ill-fated social revolution.No one would have faulted Jefferson if he didn't rape his slave(s) (we only know of one for sure).

What is really annoying is that the SEC actually audited him and couldn't figure it out.

The Republicans have removed the competency and teeth of the SEC and told them to protect the businesses they're supposed to be watching, not the people who make use of those businesses.

adoff started in 1978 or something like that. It is unfair to blame this disaster on the Reps. The SEC does have blame. The lacked the common sense to relealize that everything did not add up. As I understand it, the NY office of the SEC is to blame and not the other offices that have done their work. I have heard that this is due to the coziness between these funds and the inspectors that may want a job with them in the future.

All I know is my company lost 300 million because of him.

-> Your company <- or the one you work for? 0_o

Madoff started in 1978 or something like that. It is unfair to blame this disaster on the Reps. The SEC does have blame. The lacked the common sense to relealize that everything did not add up. As I understand it, the NY office of the SEC is to blame and not the other offices that have done their work. I have heard that this is due to the coziness between these funds and the inspectors that may want a job with them in the future.
Started what? His corrupt fund? Or his career?

y point was he was investigated by the SEC based on complaints that he was running a Ponzi scheme, and this was within the last year or so. They did such a lax job on the investigation they didn't find anything. How can you NOT find a fookin' Ponzi scheme? Well, apparently they just asked a few questions and accepted the answers they got back without digging or questioning their sources. He's rich and making lots of money so he can't be wrong.

It's the same attitude they (the Bush administration) used when some people started to investigate AIG. They were too highly leveraged and many people knew this. Elliot Spitzer started investigating it and the Bushies sued the AG's that were investigating AIG to get them to stop the investigation.

Hopefully the current investigation into the SEC will reveal how this sort of negligence can occur.

Madoff whistleblower blasts SEC (http://money.cnn.com/2009/02/04/news/newsmakers/madoff_whistleblower/)

NEW YORK (CNN) -- A whistleblower who repeatedly warned the Securities and Exchange Commission that Bernard Madoff was perpetrating a massive investment fraud testified Wednesday that the regulatory agency that oversees financial markets is inept, "financially illiterate" and far too cozy with the financial titans it is supposed to be regulating.

"The SEC is also captive to the industry it regulates and it is afraid of bringing big cases against the largest most powerful firms," said Harry Markopolos, an independent financial fraud investigator. "Cleary the SEC was afraid of Mr. Madoff."

arkopolos began contacting the SEC at the beginning of the decade to warn that Madoff was a fraud. He sent detailed memos, listing dozens of red flags, laying out a road map of instructions for SEC investigators to follow, even listing contacts and phone numbers of Wall Street experts whom he said would confirm his findings. But, Markopolos' whistle-blowing effort got nowhere.

"I gift wrapped and delivered the largest Ponzi scheme in history to them and some how they couldn't be bothered to conduct a thorough and proper investigation because they were too busy on matters of higher priority," Markopolos told the House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.

The SEC is about as helpful to the general public as the FDA is.

I think they'll be straightened up now by the current administration.

The FDA... not sure how one governmental agency can handle all they're tasked to do with their limited resources.

The FDA... not sure how one governmental agency can handle all they're tasked to do with their limited resources.If I had $2.4 billion per year to spend on food and drug safety, there's a lot I could do.

There's even a lot I could do for FREE, if I were just given the authority.

The FDA, however, does absolutely nothing. And they're merely puppets of the big industry; in fact, big industry executives typically run it.

It always galls me how people think rich people are somehow smarter and better than poor people. They did the right things to get rich. They work hard. Poor people are lazy and don't deserve to have money. Poor people are ignorant and stupid and get caught in crazy schemes that deprive them of their small amount of money.

Well, we can put the smarter theory to rest now (http://www.nytimes.com/2009/02/06/business/06madoff.html?ref=business).
There was a time — was it only two months ago? — when people would have been proud to be on a list of Bernard L. Madoff’s customers. They had made the cut, and their money was getting the Madoff touch, growing steadily and solidly in good times and bad.


Also on the list are the estate of the singer and composer John Denver.
Paul Howell/Getty Images

Ira Lee Sorkin, who is Mr. Madoff’s lawyer, is also on the list.

There they would be, among boldfaced names from the real estate world, the sports community, the arts and the corner offices of American business.

Today that list is an exhibit in Federal Bankruptcy Court in Manhattan, part of the paperwork documenting the annihilation of Mr. Madoff’s magic and his customers’ money. The boldfaced names have become red-faced, angry and perhaps embarrassed to find themselves caught in what prosecutors say is by far the largest Ponzi scheme in modern history.
...


Entire list is here: http://assets.bizjournals.com/pdf/madoff_investor_list.pdf

It always galls me how people think rich people are somehow smarter and better than poor people.Just because you are rich, have investments in many areas, and happened to hit by a fraud scheme in one, does not mean you are stupid. These people have better things to do with their time than to audit every investment.

Now, if a rich person put most or all of their money into this without investigation, then yes, they are stupid -- simply for putting all their eggs in one basket.

These people have better things to do with their time than to audit every investment.
Right, and if it had been someone poor who had done this you'd most likely be saying they were stupid and deserved to lose the money for not taking the time to fully understand what their money was going into.

Right, and if it had been someone poor who had done this you'd most likely be saying they were stupid and deserved to lose the money for not taking the time to fully understand what their money was going into.If you look up, I said the exact opposite.

It doesn't matter whether you're rich or poor; if you make stupid investment decisions without weighing the risks, you'll get no pity from me.

Of course, if you're poor, you probably don't have the assets to or aren't smart enough to invest anyway, so it's a moot point.