The whole Madoff money dilemma.

[Guest]

The whole Madoff money dilemma.

Like VS i do not really care much for Madoff victims (although it is a massive shame).

I think you're mixing me up with DGLH.

I have some sympathy for these people, but it is true that a huge proportion were greedy as hell.

[Reed John]

The whole Madoff money dilemma.

1. what does their racereligion have anything to do with it.

Jews in America are actually a pretty small community and there are many smaller groups within that broader group. Madoff did a lot with Jewish charities so he was known within a fairly small group of people who thought of him as a member of their "group" and therefore unlikely to screw them over. It's not that different in any sort of sub-community, is it? If you ask a cab driver in New York how he got the job, he'll probably tell you something like that his wife's cousin's husband's uncle knew a guy and helped him get in. Go into the kitchen of any non-fancy restaurant and you'll probably find that all the cooks are from the same place. People vouch for other people. It's what economists might call a "reputation mechanism." It's probably the oldest one.

2. You do not become rich without knowing the value of riskreturns. To run a small medium business successfully, you have to be very financially savvy. Probably more than If you were a city executive as you have to work at the operational as well as the Tactical and strategic level of management.

People who know how to run a successful dry cleaner business do not necessarily understand all the complex financial instruments that are traded on Wall Street. Likewise the Wall Street types who do understand derivatives, long, short, hedge funds, CDOs, MBSs, etc, probably couldn't run a dry cleaner. There isn't one set of skills called "business" that covers everything.

But I agree that "city executive" types should have known better if I understand correctly what you mean by a "city executive."

3. They should have done a bit more due dilligenct with their life savings rather than hand it over to a cuddly old bloke no questions ask but i guess they didn't due to the suspiciously large returns promised.

True, but some people are naive enough to trust people that their friends have vouched for. Too naive, of course, but is that such a horrible fault? Most victims of all sorts of crime probably could have avoided it by being less trustworthy, but that doesn't make them unworthy of compassion or compensation. Would you say that the victim of a bulgulry is not worthy of compassion because they didn't put bars on their windows? No.

In retrospect, it's easy to say that Madoff was clearly a creep, but he managed to fool an awful lot of people who are sophisticated about such things. He was a wily criminal. It wasn't like these people fell for the Nigerian Email scam. They were scammed by one of the best scammers in history.

but i guess they didn't due to the suspiciously large returns promised.

How were average people without advanced understanding of finance and the math involved supposed to know that the returns were "suspiciously large?" Especially when the market was going through the roof and there were so many supposedly reputible pundits and even economists on TV and in the papers telling us that we were in a "new economy" where the "old rules" don't apply.

[Incandenza]

The whole Madoff money dilemma.

Tactical Genius wrote:

2. You do not become rich without knowing the value of riskreturns. To run a small medium business successfully, you have to be very financially savvy. Probably more than If you were a city executive as you have to work at the operational as well as the Tactical and strategic level of management.

Exactly the point I was going to make.

Then again, perhaps its that a lot of these people were quite old, so maybe their judgment was not what it used to be. But also perhaps they knew they were taking a risk, but had heard all of the praise for Madoff and his seemingly magical abilities to bring in high returns, and looked the other way and decided not to listen to any doubts they might have had because they wanted to get part of that wealth also.

[WOM]

The whole Madoff money dilemma.

Incandenza wrote:

Then again, perhaps its that a lot of these people were quite old, so maybe their judgment was not what it used to be. But also perhaps they knew they were taking a risk, but had heard all of the praise for Madoff and his seemingly magical abilities to bring in high returns, and looked the other way and decided not to listen to any doubts they might have had because they wanted to get part of that wealth also.

Yes, but that's what investing is all about. That's the whole shebang. You want to turn your little bit of money into more money. It's not slimy. It's not disreputable. And it doesn't make you a complicit party when it goes wrong.

But yes, many of these people who invested with Madoff were wildly successful in their respective fields. Some were actors, some were artists, some were architects, some were, indeed, dry cleaning tycoons. That doesn't mean that any of them should have had the financial wherewithal to divine and dissect that which the SEC - and many others - either could not or did not.

[Ginger Yellow]

The whole Madoff money dilemma.

For once, I pretty much agree with TG. Yes these people were robbed, but at the same time I have very little sympathy for them. As I've said before (not sure if it were on here), it's absurd how little research people put into their savings, especially when you consider how obsessed they seem to be with house prices. People spend months researching schools for their children, but won't spend an hour, let alone a vaguely comparable period of time, when considering how to set up the last 20 odd years of their life. It's utterly insane.

People who know how to run a successful dry cleaner business do not necessarily understand all the complex financial instruments that are traded on Wall Street

Which is precisely why successful drycleaners should make sure they are not invested in those instruments. If you don't understand an investment, don't make it. Simple as that. You don't have to know everything there is to know about it, but you have to understand what the key risks are, what a typical return is like, what the variance is like over the short and long term, and what is your recourse if things go to shit. If you don't have a grasp of these things for each type of investment you're thinking of making, don't make it. Not if your best friend recommends it, not if Warren Buffett recommends it.

[WOM]

The whole Madoff money dilemma.

We're taking our eye off the ball here. These people didn't lose their shirts because they were invested in risky instruments. They lost their shirts because they weren't invested in anything at all, but thought they were. It was a Ponzi scheme. And it was perpetrated by one of the highest ranking and most respected members of the New York investment community. As was mentioned, this wasn't people throwing money at a Nigerian email and hoping it was legit.

[caja-dglh]

The whole Madoff money dilemma.

It was, even then, investing in a hedge fund. Which two minutes research would show you are a risky investment. Mostly due to a very limited level of oversight or restrictions, and an ability to enter highly leveraged positions.

Hundreds have Hedge Funds have closed with virtually zero money for investors - Amaranth, LTCM. Citadel lost about 50% in some funds last year.

But according to you, that is OK, but because they were defrauded it is somehow entirely different?

The investment is out-with protection, they acted without due caution. There are many highly respected individuals in the past who have turned out crooks. Furthermore, there are actually a list of about thirty or forty people in the Hedge Fund industry I would have listed well before Madoff, so that doesn't really hold either. Though I know of them through the public nature of their strategies, unlike Madoff.

[Guest]

The whole Madoff money dilemma.

there are actually a list of about thirty or forty people in the Hedge Fund industry I would have listed well before Madoff

Really? Are these people now under serious scrutiny as well?

[Ginger Yellow]

The whole Madoff money dilemma.

These people didn't lose their shirts because they were invested in risky instruments. They lost their shirts because they weren't invested in anything at all, but thought they were

Well exactly. They had no way of knowing what they were invested in, because they either didn't ask or did but didn't care that Madoff refused to tell them. This is why I don't recommend investing in hedge funds. Ever. Well, that and the absurd fees.

GY's number one rule of investment - if you can't get your fund manager to give you a breakdown of the portfolio by at a minimum asset class, industry sector, geography and yield, and preferably down to individual securities, don't touch it with a bargepole.

[ursus arctos]

The whole Madoff money dilemma.

They were under "serious scrutiny" by the industry before, which is why dglh knows what their strategies are.

Madoff claimed to have a strategy, but no one could ever replicate his results (and now everyone understands why).

There are real parallels between Madoff and the Steon guys.

[caja-dglh]

The whole Madoff money dilemma.

In the most part with a decent bit of digging you can find out a lot about these guys and where they are active.

To clarify for VS, my comment was more along the lines of names who I would consider well respected individuals in the community of funds, and long before Madoff was on the list. Tudor, Steven Cohen, Jim Simons, Paulson, and as we go further along there are Peltz, Soros and all their funds. Plus all the Tiger Cubs from Julian Robertson.

Through a host of books, publicized voluntary disclosures and general respect in the Industry you can get a handle on where they are interested mostly, and - loosely - how they implement their approach. Madoff never even crossed my radar as I was learning about the community.

[Tubby Isaacs]

The whole Madoff money dilemma.

Wyatt, good clarification re parole/reoffending. I think the extreme sentence (this is the longest, I think) is the best place to start with scaling down sentences. While this absurdity of 2 lifetimes worth of prison time stands, as an egregious example, it inflates every determinate sentence.

Do they not have early release on compassionate grounds in America? What a nasty place it is, in penal terms.

[ursus arctos]

The whole Madoff money dilemma.

Tubby, it isn't close to the longest, even for "white collar" crimes. There have beem federal fraud sentences of more than 800 years.

And yes, there are early releases on compassionate grounds, but they tend to be rare.

The US is extremely retrograde when it comes to penal policy (though I happen not to think that this is a particularly egregious case).

[Reed John]

The whole Madoff money dilemma.

It was, even then, investing in a hedge fund. Which two minutes research would show you are a risky investment. Mostly due to a very limited level of oversight or restrictions, and an ability to enter highly leveraged positions.

That makes sense. However, from some of the things I've heard the victims say, it appears that they thought SPIC was overseeing everything and that they had good reason to believe their investment was safe.

If I'm not mistaken, you can't invest in a hedge fund unless you're somehow "certified" as a sufficiently sophisticated investor. Obviously, a lot of these people were not very sophisticated. So how were they able to invest? I don't understand how all that works.

[Tubby Isaacs]

The whole Madoff money dilemma.

Ah thanks, Ursus. I thought I heard that 150 years was the maximum. Was that for this offence or was I misinformed/did I mishear?

Compassionate release here (when I worked in the department that arranged them, in 1999-2000) was rare, and with a few notorious exceptions only for terminally ill prisoners. No doubt one of them one day will commit an offence and we'll have the whole system cancelled.

I was only inferring that the US had no such programme from the way we keep hearing that he'll die in prison. In reality, that might just be another macho turn of phrase.

By the way, just spoke to Matt P and we rememnisced about our night out in Milan.

[ursus arctos]

The whole Madoff money dilemma.

Reed, a number of the soohistication tests rely only on the amount of money one has to invest, essentially presuming that the very wealthey must know what they are doing. Madoff was obviously not interested in genuinely sophisticated investors.

A large number of people also invested through feeder funds, which had lower minimum limits and sophistication requirements.

And I think their reliance on the SIPC is post hoc. I'd be willing to bet that they couldn't tell you what it stood for eight months ago.

Tubby, 150 was the maximum for what he was charged with, there is no statutory maximum on the federal level and on the state level one can get true nonsense like "consecutive life sentences" for multiple murders.

And yes, there is some macho posturing about his dying in jail, but I actually imagine that he might prefer that to the media maelstrom that would accompany any compasionate release.

[Reed John]

The whole Madoff money dilemma.

Reed, a number of the soohistication tests rely only on the amount of money one has to invest, essentially presuming that the very wealthey must know what they are doing. Madoff was obviously not interested in genuinely sophisticated investors.

I see. But I figured that they'd at least have to sign some kind of form stating that they understand the risks. Of course, they probably didn't read it or understand it. Perhaps that sort of "informed consent" needs to be clearer.

[ursus arctos]

The whole Madoff money dilemma.

That's a very genuine problem that is central to what I do for a living.

The US system is based on disclosure, rather than on particular issuers or products being "approved" as the equivalent of "safe and effective" by a regulator. Amd yet, very few people read the disclosure or the contracts that they sign,

[Reed John]

The whole Madoff money dilemma.

I imagine those forms ask the signer to acknowledge that they understand the inherent risks of investing in the market, but don't include any language about them accepting the risk that the fund manager might be a crook.

I don't get American obsession with "disclosure" and "transparency." It helps, but not nearly as much as those who push it imply. For example, in my field, there's a big push for doctors and device manufacturers to disclose all of their relationships. But it doesn't really illuminate much.

[WOM]

The whole Madoff money dilemma.

Madoff wishing he was in Scotland?

[Gangster Octopus]

The whole Madoff money dilemma.

So are we upset about these Ponzi victims? Especially Brian Souter and Ann Gloag. Couldn't happen to a nicer pair...

[slackster]

The whole Madoff money dilemma.

There needs to be a new class of smallest violin manufactured to express some sympathy for the greedy klutzes Levene scammed. Quite a lot of rich Israelis on his list as well as charmers like Souter.

Still, I'm sure they're all relieved his Orient shareholding was seized, along with other remaining assets he and the family didn't manage to hide, to help recompense them...

[DCI Harry Batt]

The whole Madoff money dilemma.

Good luck to him, fuck them.

[WOM]

According to the US Justice Department's website, Madoff has petitioned Trump for a commutation of his sentence.

I'd like to think his chances are laughable, but....

https://www.cnbc.com/2019/07/24/bern...zi-scheme.html

[ursus arctos]

It is rather strange timing, but he doesn't have anything to lose