Found a reasoned, if ridiculously long, analysis of the Madoff thing:
It's called 'Pondering Madoff as we enter 2009' from a business and political news blog, The Big Picture, that I've never read before.
The guest blogger is the chief investment officer of an investment company who points out, somewhat self-satisfiedly, that his company didn't invest at all with Madoff.
Cumberland Advisors did not and does not have a single penny in any fund directly or indirectly positioned with, having custody with, or in any way associated with Madoff. The Madoff structure violates all of our internal disciplines. Madoff required that investment management, brokerage, and custody all be with him under the same roof. At Cumberland we require that each of these three functions be separated by task, separately evaluated, and separately reported.....
....How the dean of a law school (quoted above) or the trustees of the charities that were allegedly burned by Madoff acted based on a standard that concentrated all the exposure with Madoff is incomprehensible to us. Placing investment management, custody, and brokerage in one institution and agreeing to opacity about the activity is viewed as the riskiest structure by skilled professionals. How their lawyers and accountants and advisers allegedly sanctioned that decision also triggers many questions.
...Madoff was allegedly involved in a criminal fraud. He purportedly practiced skilled seduction and deception. He used his communal and charitable relationships to expand his scheme. His victims were all motivated to grow their money. Some were driven solely by greed. True: they were seduced and are now hurt. But also true: they acted volitionally. We argue that the true victims are the innocent millions of people throughout the world who are the beneficiaries of the charities that have now have lost their funding because of their board’s or trustee’s decision to place money with Madoff.
What I liked most about his analysis, lengthy but worth a read, is that he focuses on the grave errors made by all the people who should have known better - financial advisors, lawyers, investment bankers, fund managers - who knew they didn't understand how the system worked but still used it, still assumed it was airtight because big important people were using it. It will be a huge job to sort out who made criminal mistakes and who were the victims of crime rather than just bad advice. I think some of the people who come off worst in all this is still the SEC, who never moved against Madoff despite recieving warnings about him as long as a decade ago. These are the people truly tasked with looking after American's economic best interest and they failed in a Titanic way.
The guest blogger is the chief investment officer of an investment company who points out, somewhat self-satisfiedly, that his company didn't invest at all with Madoff.
Cumberland Advisors did not and does not have a single penny in any fund directly or indirectly positioned with, having custody with, or in any way associated with Madoff. The Madoff structure violates all of our internal disciplines. Madoff required that investment management, brokerage, and custody all be with him under the same roof. At Cumberland we require that each of these three functions be separated by task, separately evaluated, and separately reported.....
....How the dean of a law school (quoted above) or the trustees of the charities that were allegedly burned by Madoff acted based on a standard that concentrated all the exposure with Madoff is incomprehensible to us. Placing investment management, custody, and brokerage in one institution and agreeing to opacity about the activity is viewed as the riskiest structure by skilled professionals. How their lawyers and accountants and advisers allegedly sanctioned that decision also triggers many questions.
...Madoff was allegedly involved in a criminal fraud. He purportedly practiced skilled seduction and deception. He used his communal and charitable relationships to expand his scheme. His victims were all motivated to grow their money. Some were driven solely by greed. True: they were seduced and are now hurt. But also true: they acted volitionally. We argue that the true victims are the innocent millions of people throughout the world who are the beneficiaries of the charities that have now have lost their funding because of their board’s or trustee’s decision to place money with Madoff.
What I liked most about his analysis, lengthy but worth a read, is that he focuses on the grave errors made by all the people who should have known better - financial advisors, lawyers, investment bankers, fund managers - who knew they didn't understand how the system worked but still used it, still assumed it was airtight because big important people were using it. It will be a huge job to sort out who made criminal mistakes and who were the victims of crime rather than just bad advice. I think some of the people who come off worst in all this is still the SEC, who never moved against Madoff despite recieving warnings about him as long as a decade ago. These are the people truly tasked with looking after American's economic best interest and they failed in a Titanic way.