Several big Wall Street investment banks, including Merrill Lynch and Goldman Sachs, apparently had a ‘red light’ on doing business with Bernard Madoff, the man alleged to have swindled wealthy investors out of $50bn. According to the FT, they were so suspicious of his rock-solid returns and total lack of transparency that they wouldn’t let their clients channel money to his funds – but they were so worried about offending his other investors that they refused to share their concerns with regulators. Given some of the rubbish this lot have been buying in recent years, this shows just how dodgy they thought Madoff was...
Apparently Merrill Lynch’s fund management business ‘had a red light on doing business with [Madoff] because ‘there was no transparency,’ while Goldman Sachs said it ‘never felt comfortable with Madoff’ because it ‘never understood the investment process or the returns’. And it was a similar story at most of the big Wall Street banks, who decided not to deal with Madoff directly because he refused to let them have a proper look at the books. Which raises the question: why weren’t the same alarm bells ringing at the firms who did pile into his funds?
You may also be wondering why the likes of Merrill didn’t flag this with the regulator. Well, it seems they’re not compelled to do so by law – and just as importantly, they were worried that being rude about a competitor might make them look bad. As one Merrill-ite put it: ‘You sell your product, but you don’t bad-mouth others. You don’t say bad things about Bernie Madoff. That is where you cross the line’. Disgruntled investors might argue that perpetuating a $50bn Ponzi scheme is crossing the line too, but who are we to judge...
In other shocking Madoff-related news, his London office manager Julia Fenwick describes the alleged fraudster in today’s Evening Standard as ‘the most anally retentive man I have ever met’. Apparently Bernie had such a pathological hatred for curved walls that he ferried around an interior designer with him, so he could take immediate architectural action as required. Fenwick also reports that his London team used to spend hours before his every visit lining up the computer screens and wall art (how ironic that he didn’t like crooked things).
We also learn that Madoff had a slavish devotion to a particular ‘greasy spoon’ café in Mayfair (if that’s not a contradiction in terms). And stranger still, he was equally obsessed with Boots No.7 Protect and Perfect Beauty Serum face cream, apparently buying ‘five or six tubes at a time’. He may find it hard to maintain this kind of skincare regime in his future accommodation...
In today's bulletin:
Autonomy's Lynch heads Britain's Top 100 Entrepreneurs
Treasury mulls loan insurance as Wedgwood cracks
CIPD warns against redundancies
Banks shunned 'anally retentive' Madoff
Quiz: MT's 2008 in 20 Questions