hedge funds aren't regulated right? man, i wouldn't be surprised if some other are nothing but ponzi schemes with the money these guys who run them claim to rake in.
I had a finance professor in business school who had theories on what these secretive hedge funds were doing to get their great returns. He was thinking they were doing a lot of complicated and dangerous derivative stuff. I'm sure he's disappointed to learn it's all just a simple Ponzi scheme. If the SEC isn't poring over the records of all the other hedge funds around, I'll be disappointed.
I'm gonna play the devil's advocate here. The hedge fund guy says "it's my money (and guys who chose to invest with me's money." You say... ?
I say when your actions in the market have the potential to put others at risk, then you should be regulated and overseen. Freedom is great until you start using your freedom to hurt others. It's for the same reason that I have a constitutional right to free speech, but I can't yell fire in a crowded theater.
OK see here is the problem. You can't tell people what to do with their money, unless they are doing something illegal, say... running a Ponzi scheme. The same way the US government can't tell you how to spend your money. And hedge funds are only investing their own money and those that chose to invest with them. Also, I think F.D. Khan said recessions find what auditors don't. Well, apparently Madoff's auditor is a firm named Friehling & Horowitz. I've never even heard of them nor can find their website. Apparently they own one office in which neighbours never see them operating. I'm not even sure they are even a legitimate business and not just a cover.
Looks like a whistleblower had seen the red flags in 1999 and had tried to warn people, but no actions were ever taken.
I don't understand this. Where exactly did all the money these people invested go? I get that the returns were all fake. But did he lose the original money in the market? Spend it? Put it in his personal bank account? Let's say I put $10 MM into his care in October. Where would that money be now? It seems like some of this money should still exist somewhere and be partly recoverable, no?
If you put $10m in his care -- and he manufactured statements saying it was earning 10% a year for 10 years -- you'd think you had $25m. Except he might have lost money. And your neighbour, who did the same thing -- might have withdrawn his portfolio that had 'grown' to $15m a few years earlier -- paid out with your money. Add in perks, mistresses, fine scotch, and other expenses -- and before long when the hedge fund calls to cash out to fund their redemptions the cupboard was bare. Just about all cash you put into a mutual fund, hedge fund, or other pooled investment since the summer has been used exclusively to fund redemptions.
Yeah I mean he didn't spend $50B...if you've been invested and never taken a dime, you lost everything. Now I wonder what will happen to those folks that invested and took out profits. Do they have to give them back so that losses are shared equally? Is it considered profits from a criminal enterprise? He'd have to be the worst investor of all time to lose $50B...
its a ponzi scheme, the people in first got the money of the people in last. so you have to go after the original investors, but can you do that? I guess that's how it works, that's assuming the people in first pulled out at some point.
Why start a new thread The Securities and Exchange Commission today filed civil charges against Texas billionaire Robert Allen Stanford, his offshore bank, two of his Houston-based companies and two other officers, alleging that they have orchestrated a multibillion-dollar investment fraud scheme on certificates of deposit. U.S. District Judge Reed O’Connor issued an order freezing the defendants’ assets and appointed a receiver to marshal them. “As we allege in our complaint, Stanford and the close circle of family and friends with whom he runs his businesses perpetrated a massive fraud based on false promises and fabricated historical return data to prey on investors,” said Linda Chatman Thomsen, director of the SEC’s division of enforcement, in a statement. “We are moving quickly and decisively in this enforcement action to stop this fraudulent conduct and preserve assets for investors,” she said. A company spokesman did not immediately return a call for comment. The SEC complaint, filed in federal court in Dallas, names Stanford himself, Stanford International Bank in the Caribbean island nation of Antigua and Barbuda, Houston-based broker-dealer and investment adviser Stanford Group Company, and investment adviser Stanford Capital Management. It also names James Davis, chief financial officer for the bank and Stanford’s roommate at Baylor University in the 1970s, as well as Laura Pendergest-Holt, chief investment officer for Stanford Financial Group. Alfredo Perez, spokesman for the U.S. Marshal's office in Houston, said marshals went to the Stanford offices around 10 a.m. this morning. He said they are not removing anything from the building, but are there to make sure no one disturbs computers or documents. . The company has buildings on opposites sides of Westheimer just outside the West Loop. By late this morning doors were locked and the lobby was filled with people including uniformed officials. A sign posted on the doors read: "We are temporarily closed; the company is still in operation but under the management of a receiver. For updated information please visit our Web site at www.stanfordfinancialreceivership.com." The site was not immediately active. The SEC, FBI and the Internal Revenue Service have been investigating the operations. Also investigating are the Financial Industry Regulatory Authority and the Florida Office of Financial Regulation. The SEC complaint alleges that acting through a network of Stanford Group Company financial advisers, the bank has sold about $8 billion of certificates of deposit to investors by promising “improbable and unsubstantiated” high interest rates, the agency said in a statement. The bank claims that its high rates of return are earned through its unique investment strategy, which provided double-digit returns over the last 15 years. The complaint alleges further that the defendants misrepresented to CD purchases that their deposits are safe and falsely claim that: * The bank re-invests client funds primarily in “liquid” assets; * The portfolio is monitored through a team of 20-plus analysts; * The portfolio is subject to annual audits by Antiguan regulators. The complaint also alleges that the bank is operated by a close circle of Stanford’s family and friends. The firm is a privately held network of financial services companies led by Stanford, the chairman and chief executive. The company’s Web site described its private wealth management, institutional investment banking and emerging growth companies as its core businesses, but it also offers merchant and commercial banking, institutional sales and trading, real estate investment and insurance. The company claims to have more than $50 billion in assets under management or advisement. It has more than 50 offices in North America, Latin America, the Caribbean and Europe. Brad Hem and Mary Flood contributed to this story.
This just in: Madoff has a tiny wang. (No, really.) http://www.bloomberg.com/apps/news?pid=20601109&sid=aV1m83vVjyGM
