This country loves the smoking memo. Loves the mere scent of the ignored warning to disaster. Loves the sting of accusation when it attaches to the retrospectively blind actor who missed the whispers from the tea leaves. Loves Markopolis. Loves seeing the SEC on the hot seat for missing the obvious. For ignoring the… the “smoking memo.” Loves the ignored FBI memo warning, vaguely, on the looming dangers to the United States. No surprise then that revelations that Jack Nash warned J. Erza Merkin “numerous times over the years” that something was amiss in Chateau Madoff would produce Dealbook entries on same:
Mr. Nash, the former chairman of the investment giant Oppenheimer & Company and a pioneer of the modern hedge fund industry, had briefly invested with Mr. Madoff in the early 1990s, but pulled his cash out after a closer look raised red flags about the man who last month admitted to running an enormous Ponzi scheme.
According to the civil lawsuit against Mr. Merkin filed Monday by New York Attorney General Andrew M. Cuomo, Mr. Nash told Mr. Merkin numerous times over the years that he was suspicious of the steady profits Mr. Madoff posted.
We wonder, some, where the story is. “Numerous” warnings over the years that someone is “suspicious of the steady profits,” is hardly a smoking memo. But then, perhaps we haven’t seen all the memos?
Merkin Was Warned by a Wall Street Legend [DealBook]
Everyone “knew”, in hindsight. Seeing Ezra in shul or at a cocktail party and saying “yeah, I think Madoff’s numbers seem too good to be true” is more opinion than warning.
Nash & Merkin are social acquaintances, if not friends. Nash was never going to say “YOU HAVE NO IDEA WHAT YOU’RE DOING! GET YOUR MONEY OUT, YOU IDIOT”.
Like no one had money invested in Internet stocks in 2000.
Clearly there are different degrees of opinion and/or warning. But going back to Markopolis, he did say “DON’T BRING THAT FUND INTO YOUR CITY CAUSE IT’S A FREAKING PONZI SCHEME FOR THE FOLLOWING 20 REASONS”
@ab
which is why the thought of giving the SEC wider powers is so frightening. If the lawyers running the place couldn’t understand the impossibility of madoff’s options strategy, imagine them in charge of regulating systemic rsik.
-@1 – a lot of people knew madoff was a thieving a-hole, they just thought he was stealing FOR them, never realised it was FROM them.
#4,
bingo. or they thought that whatever hinkey stuff madoff was doing, they’d have ample opportunity to get out before the roof fell in.
of course, once it turns out madoff’d doing nothing more complicated than running a Ponzi scheme, any “profits” they might have pulled out are subject to being clawed back by the SEC/DOJ/receiver.
@3 – Fair point – the solution may be that the SEC might need to pay decent salaries to its workers are be able to terminate those who are not competent. I know that won’t sit well with the person in North Dakota who thinks $90,000 a year is a fortune, but sometimes you get what you pay for.
What irredeemable scolds we Americans are to take such unsightly interest in the meaningless trivialities of who said what to who, or what memo was sent to who, or who was briefed on what at some point in the distant past. Such shameful dirt digging and post hoc analysis only serves to disgrace the plebes who engage in it. Clearly, our guardians, self- or otherwise appointed, are not to be called to account with evidence that might implicate a dereliction of duty.
People who pulled out their money before the Ponzi scheme collapse made huge gains. Who are they? I think there’s some good stories in there somewhere. Who are the top ten Madoff-Ponzi winners?