The world is a school and Professor Bernard Madoff is its best teacher. I am learning the lesson titled ¨How the world really works¨. Elaborate fund reports illustrated with statistical formulas and pie charts, must be takes as fiction literature or publicity material. The world works on personal eye to eye relationships. Nothing happens till you show up.
Prof. Bernard Madoff, creator of the largest known (emphatised: known) Ponzi (pic) scheme in history, relied on a network of leverage providers and creative fee arrangements built up over more than a decade to feed his operation.
The scandal, which may trigger at least $17 billion in losses, shows how much the hedge-fund business relied on trust and personal relationships rather than the rigorous due diligence typically demanded by institutional investors and lenders that have come to dominate the industry in recent years. "It's gone from being an old boy's network to a real business. If you knew the right people, or if the right people could vouch for you, you were in," said Sol Waksman, president of BarclayHedge, which tracks the performance of managers in the $1.5 trillion hedge-fund industry. "That's what due diligence was -- checking the references."
Tremont Group Holdings and Fairfield Greenwich Group, two of the oldest hedge-fund investment firms, said they had $10.8 billion with Madoff this week -- more than half of the total assets managed by the firms. Other firms that put clients' money with Madoff include Union Bancaire Privee, the largest fund-of-hedge-funds business in the world with roughly $1 billion of exposure, and Banco Santander (STD), reported to have about $3 billion at risk via its Optimal fund-of-funds unit. Ascot Partners, a hedge-fund firm run by former GMAC chairman Ezra Merkin, had $1.8 billion with Madoff, while Fix Asset Management, run by Charles Fix had roughly $400 million. Taki from Takimagazine, is one of Charles Fix's investors. Why? Both are Greeks. Affinity. On the other hand, many of Madoff's investors were Jews who considered themselves his ¨personal friends¨.
Human, too human.