Asia Sentinel, 9 Jan 2009, Philip Bowring
The Madoff scandal reveals a cornucopia of back-scratching fees
The lesson of the US$50 billion Ponzi scheme perpetrated by fraudulent investment guru Bernard L. Madoff is not just the danger of trusting people who belong to the same club or ethnic group, nor even of the importance of making simple checks on the bona fides of an investment intermediary.
Madoff represents the tip of a much bigger – though not actually fraudulent – scandal, the percentage of an individual’s savings lopped off by the multi-tiered structure of much of the financial services industry. One casualty of recent events should be the profits of intermediaries and there are plenty of indications – such as from Hong Kong-listed fund manager Value Partners – that this is beginning to happen. However, an even bigger question market hangs over the bona fides of some of the institutions that passed funds to managers, be they honest ones like Value Partners or dishonest ones such as Madoff.
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