Posted on 12/25/2008 1:35:13 AM PST by TigerLikesRooster
Madoff meets Lehman
Posted by: Matthew Goldstein on December 19
It’s not a lot of money compared to the estimated $3 billion that a fund managed by The Tremont Group has lost in the Bernard Madoff scandal. But the same Tremont fund also claims it lost $25 million when Lehman Brothers went bust in September.
In October, Tremont’s Rye Select Broad Market fund filed a lawsuit alleging that it was owed some $25 million on a derivatives contract that permitted it to borrow money from a Lehman subsidiary. The derivative contract enabled the Rye fund to leverage its investment in Madoff’s firm by a factor of 3 to 1—a move that enabled Tremont to generate higher returns and justify the fees it was charging investors.
Tremont’s Rye fund was one of a handful of “feeder’’ funds that marketed Madoff’s fund under its own independent brand name. The Rye fund’s marketing literature said it allocated “substantially all of its assets to one manager.’’ That manager, of course, was Madoff, who federal prosecutors allege may have engineered one of the biggest Wall Street scams ever.
Madoff, the former Nasdaq stock market chairman with more than four decades of trading experience, relied on funds like Rye to attract new money to his enterprise. If Madoff was indeed running a Ponzi scheme, as he himself admits, bringing in new money was essential to its success. The key to a Ponzi scheme is attracting new investors to pay-off older investors who seek to redeem either all, or a portion of their money.
(Excerpt) Read more at businessweek.com ...
Ping!
Simplistic time out.
Jail time for the old man as well as his sons. I’m just saying the investors maybe forgiven thier dubmness, but I think the Madoff sons need to go to jail. I admit I know nothing about high finance, or stock markets, or insider trading. I know enough people got defrauded of thier savings, that to let his two kids off the hook is stupid. And I don’t care, if they suffer not, for if that happens, I think less of rich people than I alreay do.
Dumba$$es all. And no sweat off of my back, unless there is a bailout, and I’ll take names for that.
Naturally, an investor should expect to pay more in fees to financial experts when they leverage a ponzi scheme. Sheese!
One has to wonder how many accomplices he had in NASDAQ and in other places. One man did not do all this.
It is a very scary picture.
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