Thursday, December 11, 2008

Hedgefund Hypocrisy or Madoff's Maneuvers

You know that I just want to post about shopping for the holidays but one again we're dealing with Wall Street Fraud which continues to be a target rich environment.

So now we have the former head of Nasdaq....NASDAQ!!!
accused of running an investment Ponzi Scheme and racking up 50 billion dollars in losses.

50 billion dollars...seriously....this is getting close to being some real money!

On the good side...after being caught with his hand in the honey jar he's manly enough to step up and admit his culpability.
"There is no innocent explanation," Madoff said, according to the criminal complaint. He told the agents that it was all his fault, and that he "paid investors with money that wasn't there," according to the complaint.
The $50 billion allegedly lost would make the hedge fund one of the biggest frauds in history.

While I'm all for limiting the downside risk....his particular strategy for doing this might not be what you or I would do.
The fund told investors it followed a "split strike conversion" strategy, which entailed owning stock and buying and selling options to limit downside risk, said the investor, who requested anonymity.
Jon Najarian, an acquaintance of Madoff who has traded options for decades, said "Many of us questioned how that strategy could generate those kinds of returns so consistently."

This is the part of the story that I really love.
Madoff remains a member of Nasdaq OMX Group Inc's nominating committee, and his firm is a market maker for about 350 Nasdaq stocks, including Apple, EBay and Dell, according to the website.
The website also states that Madoff himself has "a personal interest in maintaining the unblemished record of value, fair-dealing, and high ethical standards that has always been the firm's hallmark."

Oh it's just so good to know that Madoff had high ethical standards.
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