It is implausible that every one of Rajaratnam’s sophisticated investors were in the dark. Yet the law says that, unlike the Madoff investors, they bear no responsibility for ignoring red flags. On the contrary: They are being rewarded for looking the other way…The phrase I find myself muttering a lot these days is: “There oughta be a law.”…The more I think about it, the more I’m convinced that there ought to be a law that says that if a fund manager’s “edge” is insider trading, his investors should have to pay a price, too. Maybe then, they’d be less willing to look the other way when their fund manager starts doing things he shouldn’t. [NYT]
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- Use the Bloomberg command
NH BLG_DEALBREAKER <GO>
to access Dealbreaker
43 out of 49, baby! Winny 44, and then 5 more….
The corollary to this would be the policeman giving not only the driver of the car a DUI but everyone else in the car a ticket as well.
He should stick to making cell phones.
Every once in a while when I think too hard about something I come up with similarly brilliant ideas, if a hooker goes mad and starts killing her clients we should put in jail her first love who did not marry her.
Now you’ll find that if they wear a wig, look like bernie in drag and are offshore, they’ll be very hard to nab.
http://blogs.reuters.com/columns/2011/06/09/picard-aims-for-triple-word-score-in-madoff-case/
Picard aims for triple-word score in Madoff case
Not a terrible idea
This would not be good for GS shareholders.
Does he mean more like FMITAFP or more like 3 & 50?
- guy who thinks 3 & 50 is a little steep
I believe they are investing in litigation and reputation risk and should keep the well deserved returns.
The correct corollary would be putting in prison all the voters who’ve voted for the past 3-4 Governors of Illinois. And any other indicted, convicted Reps/Sens.
Also, anyone at the NYT who has to issue a correction for their story should be fired. As should their editor. And the ‘fact-checker’ [trying and failing to maintain a straight face.]
Guess it just depends on how you value jail time vs giving back some alpha. . .I’m with you though, feels like a push to me
In all seriousness, what was the red flag that would have been apparent to a third party investor in Raj’s case?
JoNo: “But there were plenty of red flags around Rajaratnam, too. Hedge fund managers will tell you that there were always rumors about insider trading at Galleon. Indeed, it was at the heart of Rajaratnam’s business model.”
I guess we should have read the business model section of the PPM more closely.
Rumor ≠ fact. I have a tough time thinking it appropriate that XYZ college endowment should suffer because the CIO chose to ignore a rumor.
investors on the other side of the trades in question do have a cause of action against the lps. there also is enough evidence from criminal trial to justify discovery of records on other trades for civil actions. No doubt lawyers are working on these civil actions now. lps are partners . . . all gains from the partnership are at risk.
All rumors and hearsay must be acted upon. It’s the only prudent course of action.
- Sen. McCarthy
This makes perfect sense to me, is there anyway
we could backload it so that account holders with less than $1 million lose nothing
while Qualified Purchasers lose their entire investment and cover the penalties
of smaller LP’s with funds redeemed from other places such as bank deposits,
selling their government bonds, or redeeming from other legitimate funds?
This would seem fairer and could really get the economy moving.
del plz erorr