Sunday, December 28, 2008

Fund Blames US Regulators for Losses

You gotta love the Madoff Middlemen. Now they are blaming the regulators for their own failures, even from overseas. A British investment fund, which apparently lost something like 30 million dollars, is screaming about the "systemic failures" in the US regulatory system.

The SEC and FINRA certainly blew this. (Why does no one talk about FINRA's culpability here? They are the primary regulator for Madoff's broker-dealer, not the SEC). However, the SEC was not created to protect 300 million dollar hedge funds, and is certainly not in the business of protecting hedge funds that are located in foreign countries.

Those investment institutions are considered to be experienced enought, and financially educated enough to protect themselves, to conduct their own due diligence and to make their own investment decisions. The US securities statutes recognize the ability of investment professionals to make their own decisions, as do the investors who give these managers their money to invest.

The SEC blew this, but that does not excuse, or even address, the failure of these well paid "investment managers" to recognize a Ponzi Scheme when it was staring them in the face. And, it is comments like this, and the fact that other professionals did spot the fraud, that leads to the question

"What the heck did you do for your 2% plus 20%?"

If the fraud was so easy to spot that the SEC should have stopped it, let's take a look at the fund's due diligence file when it investigated, recommended, and maintained its investment in Madoff.

That is where the blame lies.

Investment fund slams US regulators

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