Comments on: Madoff Offers Biggest Lesson In Due Diligence http://www.tradersnarrative.com/madoff-offers-biggest-lesson-in-due-diligence-2143.html Freshly squeezed market commentary & analysis Wed, 17 Mar 2010 22:50:30 +0000 http://wordpress.org/?v=2.0.2 by: Babak http://www.tradersnarrative.com/madoff-offers-biggest-lesson-in-due-diligence-2143.html#comment-39396 Sun, 17 May 2009 16:08:15 +0000 http://www.tradersnarrative.com/madoff-offers-biggest-lesson-in-due-diligence-2143.html#comment-39396 prosse, this is a <a href="http://www.tradersnarrative.com/hedge-fund-operational-due-diligence-book-review-giveaway-2343.html" rel="nofollow">good place to start</a>. prosse, this is a good place to start.

]]> by: prosse http://www.tradersnarrative.com/madoff-offers-biggest-lesson-in-due-diligence-2143.html#comment-39378 Sun, 17 May 2009 07:09:31 +0000 http://www.tradersnarrative.com/madoff-offers-biggest-lesson-in-due-diligence-2143.html#comment-39378 How exactly do you do due diligence? I know it's not enough to check with the SEC, so how far do you go? How exactly do you do due diligence? I know it’s not enough to check with the SEC, so how far do you go?

]]> by: Russ Abbott http://www.tradersnarrative.com/madoff-offers-biggest-lesson-in-due-diligence-2143.html#comment-36036 Wed, 17 Dec 2008 17:31:26 +0000 http://www.tradersnarrative.com/madoff-offers-biggest-lesson-in-due-diligence-2143.html#comment-36036 It's SO easy to see red flags in hindsight. Let me pose a challenge. Which red flags we are ignoring now, and what should we do about them? It’s SO easy to see red flags in hindsight.

Let me pose a challenge. Which red flags we are ignoring now, and what should we do about them?

]]> by: Gary http://www.tradersnarrative.com/madoff-offers-biggest-lesson-in-due-diligence-2143.html#comment-36035 Wed, 17 Dec 2008 16:51:45 +0000 http://www.tradersnarrative.com/madoff-offers-biggest-lesson-in-due-diligence-2143.html#comment-36035 There were NOTHING but red flags. No name accountant Clearing and trades in house. Family members as compliance officers. A 2001 Barrons article suggesting fraud. A simple strategy -- easy to test -- that shows risk-reward nothing like claimed. I strongly suspect that the "fiduciaries" believed that Bernie was front-running. This makes them greedy, unethical and stupid. I hope there are some zealous lawyers in Europe! There were NOTHING but red flags.

No name accountant
Clearing and trades in house.
Family members as compliance officers.
A 2001 Barrons article suggesting fraud.
A simple strategy — easy to test — that shows risk-reward nothing like claimed.

I strongly suspect that the “fiduciaries” believed that Bernie was front-running. This makes them greedy, unethical and stupid. I hope there are some zealous lawyers in Europe!

]]> by: Babak http://www.tradersnarrative.com/madoff-offers-biggest-lesson-in-due-diligence-2143.html#comment-35988 Mon, 15 Dec 2008 20:21:13 +0000 http://www.tradersnarrative.com/madoff-offers-biggest-lesson-in-due-diligence-2143.html#comment-35988 Russ, the fact that he was the broker/dealer, custodian and investment manager all rolled into one was a red flag. So was the unknown accounting firm that audited a vast and complex financial firm. So was the equity curve. There were people that looked at Madoff and walked away after due diligence. Of course, as you mention, others went on his reputation and stature. Russ, the fact that he was the broker/dealer, custodian and investment manager all rolled into one was a red flag. So was the unknown accounting firm that audited a vast and complex financial firm. So was the equity curve. There were people that looked at Madoff and walked away after due diligence. Of course, as you mention, others went on his reputation and stature.

]]> by: Russ Abbott http://www.tradersnarrative.com/madoff-offers-biggest-lesson-in-due-diligence-2143.html#comment-35985 Mon, 15 Dec 2008 18:29:49 +0000 http://www.tradersnarrative.com/madoff-offers-biggest-lesson-in-due-diligence-2143.html#comment-35985 It's a lot easier to pile on now that we know that Madoff was a fraud. Before that, however, it was not so easy. Much of the world, including the investment world, runs on trust and personal relationships. One can't investigate everything. One has to rely on one's knowledge of the people you are dealing with. Madoff seemed especially trustworthy. He had been the head of NASDAQ; he had been in business for decades; no one ever had trouble withdrawing money; he was audited in 2001. What more can one do? It’s a lot easier to pile on now that we know that Madoff was a fraud. Before that, however, it was not so easy. Much of the world, including the investment world, runs on trust and personal relationships. One can’t investigate everything. One has to rely on one’s knowledge of the people you are dealing with. Madoff seemed especially trustworthy. He had been the head of NASDAQ; he had been in business for decades; no one ever had trouble withdrawing money; he was audited in 2001. What more can one do?

]]> by: Babak http://www.tradersnarrative.com/madoff-offers-biggest-lesson-in-due-diligence-2143.html#comment-35980 Mon, 15 Dec 2008 16:20:02 +0000 http://www.tradersnarrative.com/madoff-offers-biggest-lesson-in-due-diligence-2143.html#comment-35980 Declan, image is everything, perception is reality... until the tide goes out. Declan, image is everything, perception is reality… until the tide goes out.

]]> by: Declan Fallon http://www.tradersnarrative.com/madoff-offers-biggest-lesson-in-due-diligence-2143.html#comment-35977 Mon, 15 Dec 2008 15:05:21 +0000 http://www.tradersnarrative.com/madoff-offers-biggest-lesson-in-due-diligence-2143.html#comment-35977 No doubt these firms had a cadre of Ivy League MBA's doing their DD research; I wonder how much damage this does to their reputation and the reputation of their schools? http://zignalsblog.blogspot.com/2008/12/wisdom-of-harvard-mba.html DJF No doubt these firms had a cadre of Ivy League MBA’s doing their DD research; I wonder how much damage this does to their reputation and the reputation of their schools?

http://zignalsblog.blogspot.com/2008/12/wisdom-of-harvard-mba.html

DJF

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