Want support for your theory that 'ole Bernie couldn't have done it alone? The guy loved his vacations, and yet the firm apparently provided clients with trade-by-trade reconciliation of returns. Someone had to be doing all that backtesting to come up with trades that fit the numbers, and that's probably not as simple when you are in the South of France for months at a time.
Madoff Scheme Was 'Impossible' to Do Alone, Says EIM's Busson [Bloomberg]
Posted by guest , Dec 16, 2008 4:31PM
This dude is the Unicorn of bankers
He has 2 kids with Elle McPherson AND is engaged to Uma Thurman
Only Sarkozy half-brother Olivier has come that close; shaking hands wth Carla Bruni
Posted by guest , Dec 16, 2008 4:35PM
Someone had to code the "10% return search" algorithm, something that Bernie probably couldn't do by himself.
Posted by guest , Dec 16, 2008 4:37PM
I dunno, writing a computer program to automate most of the time consuming work wouldn't be that impossible.
Combine that with internet access and a laptop I really doubt it matters whether he was on-site or not.
And didn't he make money off the trades and not the profit/loss? Sounds like all he had to do was convince people to give him money and just trade the shit out of the market and use the computer to sort it out later.
Posted by guest , Dec 16, 2008 4:37PM
This guy is brilliant - a French cartoon character. Per Wikipedia:
Growing up in Switzerland, some sources have suggested that Busson made early profits selling toothpicks door-to-door (which he denies),[4] but he was educated in France and at the Institut Le Rosey in Switzerland. He then served national service as a nurse in the French army, where a friend said: "He loved the discipline of the army - it was the making of him." [5].
On being demobilised, Busson luxuriated in the Riviera life, enjoying a well-publicised relationship with the actress Farrah Fawcett and appearing regularly in the tabloid gossip columns. As he often refuses to give interviews, stories surround Busson - the story about Fawcett is that he masqueraded as an Italian prince on the French Riviera where he wooed Fawcett away from Ryan O'Neal. The story is only partly true, in that it was perpetuated by the gossip columnist "Taki" as a sort of in-joke: Taki knew Busson's mother, who was friends with Fawcett; Busson's father often met Fawcett at dinner parties.[
Posted by guest , Dec 16, 2008 4:38PM
Y'ever see that movie where Steve Martin was a weatherman?
That's how Bernie did the trade reports when he was out schtupping supermodels.
Posted by guest , Dec 16, 2008 4:38PM
@---~---@
@----~----@
@-----~-----@
@------~------@
RUN! The wideclops is getting wider!!!!
Posted by guest , Dec 16, 2008 4:43PM
Someone had to code the "10% return reverse engineering" algorithm, something that Bernie probably couldn't do by himself. The story of its evolution and scale-up will be "When Genius Failed II".
Posted by guest , Dec 16, 2008 4:45PM
@2 yeah but he could have had someone write it generally enough so he just tweaks the inputs to get another result which was not intended by the original programmer.
or he could have hired several programmers to work on parts and only assemble them himself.
or had someone written it and then changed a small portion of the actual code.
there's lot of ways to do it and they don't require you to be some hacker. a working knowledge of trading computers and their infrastructure, which he presumably had from NASDAQ and his own business, would be enough.
Posted by guest , Dec 16, 2008 4:53PM
Why are we discussing this when more important matters are afoot, such as:
http://www.thedailybeast.com/blogs-and-stories/2008-12-16/the-return-of-chest-hair/
THIS is altering the course of history.
Posted by guest , Dec 16, 2008 4:54PM
@3 @8,
Would you two get back to work on my IT helpdesk ticket. Please refrain from any further idiotic ruminations.
Posted by guest , Dec 16, 2008 4:56PM
EP - I know that at your fake private equity fund they probably don't care about risk management and compliance, but if they did they would know about the "Nick Leesam" rule: make the traders take vacations. One way to catch a con-artist or a lone cowboy doing deals that jeopardize the whole institution is to require others to cover for them while they are on vacation. Nick never took vacation because he could never ask anyone to cover for him.
So, Busson sees a guy taking vacations and its one sign that he's not a fraud.
just sayin'
Posted by carrytrade , Dec 16, 2008 4:58PM
I don't recall a section on the Series 7 or 63 about Ponzi Schemes...
(http://deltahedged.com/)
Posted by carrytrade , Dec 16, 2008 5:00PM
I don't recall a section on the Series 7 or 63 about Ponzi Schemes...
(http://deltahedged.com/)
Posted by guest , Dec 16, 2008 5:00PM
I think the fact that he took vacations indicate that NOTHING was going on in his absence, just like nothing (except money-losing trades) was happening in his presence. His reports were quarterly? He could easily take off a month and send out statements.
Please - they were all "cooked" anyway, so it wouldn't matter if he was there or not there, it was all fantasy anyway.
Posted by Spooky , Dec 16, 2008 5:00PM
@10 - Zing!
Posted by guest , Dec 16, 2008 5:01PM
saw the guy in the locker room once, he is hung like a mule
Posted by carrytrade , Dec 16, 2008 5:03PM
I don't recall a section on the Series 7 about Ponzi Schemes...
http://deltahedged.com/
Posted by carrytrade , Dec 16, 2008 5:07PM
I don't recall a section on the Series 7 about Ponzi Schemes...
http://deltahedged.com/
Posted by guest , Dec 16, 2008 5:17PM
@12,13,17,18 - I'm a lead farmer, mother fucker!!
Posted by guest , Dec 16, 2008 5:20PM
Are Ponzi Schemes considered a separate asset class? It seems they have low correlation with the general market so should provide good diversification benefits. Are there any structured products, tradable indices or any ETFs around that can give you exposure?
Posted by guest , Dec 16, 2008 5:21PM
http://www.guidestar.org/FinDocuments/2006/411/582/2006-411582224-031e6555-F.pdf
pg 16
Posted by guest , Dec 16, 2008 5:22PM
I heard the guy spent six weeks in the south of france who was doing his dirty work when he was out of office HINT: Silver Spoon
Posted by guest , Dec 16, 2008 5:43PM
@14 Exactly, the man was a con-artist...People got greedy and believed him, and nobody asked questions...
What I don't get is why didn't he just halt redemptions and go to Switzerland.
Posted by guest , Dec 16, 2008 6:05PM
@20, postage stamps mostly. That's how CP did it.
Posted by VOL IS KING , Dec 16, 2008 6:17PM
@20
"Are there any structured products, tradable indices or any ETFs around that can give you exposure?"
All of the above. Might I suggest you start with the original and still the greatest. Shiny yellow rock. er. Gold.
Posted by Seaman Bodine , Dec 16, 2008 6:35PM
arpie is a douche
Posted by guest , Dec 16, 2008 7:39PM
@10 sorry, too busy putting your idiotic quant models back together to the tune of 500k a year. i've forwarded your ticket to some of your peers who might be able to help. they're interns, please be gentle
Posted by guest , Dec 16, 2008 8:19PM
someone get on the Madoff version of "Downfall" for video, quick!
Posted by guest , Dec 16, 2008 8:27PM
@27 someone doesn't have a job...
Posted by guest , Dec 17, 2008 12:15AM
It seems like the big task was concocting 3 months of trades during the last 5 days of each quarter. Just in time for retroactively outstanding quarterly statements.
If you've only got 20 "clients" to generate statements for, any joebob computer guy could do that for you. Was Madoff the joebob computer guy doing that? Or were his idiot fishing senior executive sons the ones with the joebob beginning computer skills?
Computers are hard - blame the dad.
Posted by guest , Dec 17, 2008 12:48AM
How is there not a run on EVERY hedge fund right now? These guys are liars.
Posted by PhilSeltzer , Dec 17, 2008 7:18AM
@misinformed: statements were monthly and trade advices were generated when the "trades" took place.
Posted by guest , Dec 17, 2008 9:29AM
How is a ponzi scheme any different than what the US gov is doing now? Taking new money, or the promise of it, to pay off unsustainable promises to the older investors. We'll suffer the same fate as Madoff.
Posted by guest , Dec 17, 2008 10:46AM
@20 - more than you think. For a one time, low fee of $10k - er, no, make that $100k, I can give you a list of them and an infallible quant model put together by a real, certified geek, showing how to time them.
Yours Truly,
Chris Cox