RE: Madoff

[Jeff Lipton]

RE: Madoff


I am always amazed at the hypocritical regulatory finger pointing when a fraud is not found as in Madoff but even angrier by the usual knee jerk reactions and the closing of the barn door after the horses are out.

In this case people have been saying for years before and after the Long Term Capital that hedge funds must be regulated a lot closer. In fact having worked offshore for many years I can tell you that its harder to open up a bank account in Barbados than New York, Paris or London, or set up a trust or purchase asset protection insurance. You would need a passport, two utility bills three letters of reference (one from a bank) all notarized. But yet billions go unnoticed in the surreal institutional world.

Even more amazing is the fact that there not only several intuitions but competitors who actually complained of the fact that Madoff was involved in a Ponzi scheme early on, but yet nothing. All of the fund business adheres to the regulatory world except hedge funds that are offshore funds and ?not as closely regulated??

This is not true all of the offshore funds, our clients buy a lot offshore funds but they are regulated very closely. Hedge funds are essentially private funds and are not regulated and the issue of the audit and supporting documentation must be scrutinized, what kind of lax double standards these institutions that look down their noses at everyone have.

Truth is all of Madoff?s clients are guilty of the greater fool theory and maybe now we will get disclosure in an industry (hedge funds) that has proven once again that it must be more closely regulated and monitored.

Lastly, let?s all stop with that foolish belief that anyone is that much smarter than the market (and thus not scrutinized because we apparently cannot understand what they do so why bother?).

Or that they can get consistent double digit returns over years and without risk, for its this foolishness that makes Ponzi schemers flourish, lets regulate this industry so that it plays on the same filed as all other funds and institutions.

Jeff Lipton