[sschullo]

Hi all,
Reports keep poping up in the paper almost daily. In todays LA Times there are two articles on the Madoff fraud case.
Transparency is a powerful watch dog in the investment world. Its similar to the Efficent Market Hypothesis. If Madoff investment strategies were available to all of us through the internet, many people could have looked at the data and warned people not to invest.
But when you have an exclusive list of people with secrecy as tight as the CIA, you are vulnerable.
The featured couple lost 1.2 million. Their regular manager charged 3.8%!!! This is a real life example that the more you pay for management, the less you get. But for this unfortunate couple, they lost it all. Such horror.

Read on:
Snip
"Chais (broker in charge of the couples investment) took a piece of the profits as management fees, Chew said, usually about 3.8%.

In hindsight, he said, there were things that should have raised red flags, including an air of exclusivity and the notion that not just anyone could get in.

"It was always this kind of private, hush-hush fund," he said.

Chew thought he and his wife were invested in currencies, stocks and other securities; Madoff's name was never mentioned. But quarterly statements were so vague, Chew said, that he couldn't tell "what trades were made or how they were made or who made them." Snip

All of this for an 15% performance year after year. But there is a minus 3.8% for fees, but who cares about that when you get 15%.

click here for a fascinating and horrifying story

[intruder]

Hi all,
Reports keep poping up in the paper almost daily. In todays LA Times there are two articles on the Madoff fraud case.
Transparency is a powerful watch dog in the investment world. Its similar to the Efficent Market Hypothesis. If Madoff investment strategies were available to all of us through the internet, many people could have looked at the data and warned people not to invest.
But when you have an exclusive list of people with secrecy as tight as the CIA, you are vulnerable.
The featured couple lost 1.2 million. Their regular manager charged 3.8%!!! This is a real life example that the more you pay for management, the less you get. But for this unfortunate couple, they lost it all. Such horror.

Read on:
Snip
"Chais (broker in charge of the couples investment) took a piece of the profits as management fees, Chew said, usually about 3.8%.

In hindsight, he said, there were things that should have raised red flags, including an air of exclusivity and the notion that not just anyone could get in.

"It was always this kind of private, hush-hush fund," he said.

Chew thought he and his wife were invested in currencies, stocks and other securities; Madoff's name was never mentioned. But quarterly statements were so vague, Chew said, that he couldn't tell "what trades were made or how they were made or who made them." Snip

All of this for an 15% performance year after year. But there is a minus 3.8% for fees, but who cares about that when you get 15%.

click here for a fascinating and horrifying story

The original amount of Chew's investment was 600,000. Other family members lost 30M.
The fund manager who invested Chew's money with Madoff will be personally liable to all of his clients who lost money for the failure to conduct due dilligence. The only question is how much did he have invested with Madoff. There is also a question of whether the fund manager was registered with the SEC as an investment advisor which should be a red flag to a potential investor.