Gregory Zuckerman of the Wall Street Journal put together a story on the Multiple Red Flags in Madoff Case.
- Steady returns in every kind of market
- Operated as a broker dealer with an asset management division. Why not simply act as a hedge fund and pocket big gains, rather than profit from trading commissions. “Why work your magic for pennies on the dollar?”
- No independent custodian involved who could prove the existence of assets
- Blatant conflict of interest with a manager using a related-party broker-dealer
- The size of the fund was enormous compared the market in which it operated
- Questions about where the assets were
- Used a small auditing firm
- Inadequate number of employees in relation to the purported size of the operation
- Inadequate office space in relation to the purported size of the operation
- Clients did not have electronic access to their trading files
- Clients experienced delays in getting their money back
- Madoff would tell you nothing about how he achieved his returns
- Lack of transparency
See:
- SEC Complaint hosted at JD supra
- Criminal Complaint hosted at JD supra