Word: feeder
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Dates: during 2000-2009
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...seems to me that many of Madoff's fund-raising generals-many close friends who were unlicensed to trade securities-down the line must have been given strict commands to avoid using the Madoff name. These generals ran many of Madoff's complex network of domestic and international feeder funds, which in turn created their own sub-funds. It was into these sub-funds many private investors, foundations, schools and other endowments poured their life savings. From the super wealthy, like Mort Zuckerman, to schmoes like me, the victim-cry is: Who the hell is Bernie Madoff? Had we known...
...people who invested money with Madoff didn't know they were relying on a rinky-dink accounting firm to watch over their investments. That's because more than half of the $25 billion-plus in losses investors have so far claimed came to Madoff through so-called feeder funds. These funds were set up by outside firms, which would then funnel the money they received from investors to Madoff. Unlike Madoff's, all the firms running feeder funds had well-known accounting firms listed as their auditors. So, for instance, when investors put money in the Rye Select Broad Market...
...fact, it now appears KPMG, along with the other auditors of the Madoff feeder funds, did very little to ensure investors weren't being ripped off. Observers say it's likely that all the accounting firms did was check the statements that Madoff himself produced. In the 64-page document Rye Select sent to all its potential investors is the statement "Valuation provided by the counter party affiliate [Madoff] will not be subject to independent review...
Many of Madoff's clients invested in his funds through a number of feeder funds, which were sold by other firms. Like supermarket brands, the funds carried the name of the investment-adviser firm, which then sent the money to Madoff to be managed. One such fund, the Tremont Broad Market Fund, attracted billions of dollars to Madoff. Many of these funds leveraged their own investment in Madoff's funds, which could amplify the losses felt by the collapse of Madoff's firm. (See the top 10 worst business deals...
Another Madoff feeder fund was run by Maxam Capital. The head of that firm, Sandra Manzke, a former head of Tremont, has recently been outspoken about misbehavior in the hedge-fund industry. She recently sent a letter out to hundreds of hedge funds berating them for their large fees and for halting client redemptions when funds were down. "I am appalled and disgusted by the activities of a number of hedge-fund managers," she wrote in late November...