Damn, it seems like I do more due diligence on a freakin' compilation than the SEC did on a major Wall Street investment adviser.
For non-accounting folks, compilations are the lowest level of financial statements that CPAs prepare for their clients. Absolutely no opinion is offered by the preparer, unlike audited financial statements.
You probably do.
Have you seen these checklists of “due diligence” that funds of funds claimed to have done of their target hedge funds?
There’s NO way that Madoff’s fund passed these lists the FoF’s have put up. These checklists of “due diligence” are going to be a wonderful exhibit A for the lawsuits filed against FoF’s.
The SEC had to have their head lodged firmly and moistly past their sphincters to not catch the fact that Madoff wasn’t filing and reporting the required statements - and that a guy who claimed to be running so much money was providing hand-written 1099’s for end of year LP reports should have had people’s heads whipping around at the same time they’re asking “Whaaaaaa?”