The Owner's Name is on the Door.

"In an era of faceless organizations owned by other equally faceless organizations, Bernard L. Madoff Investment Securities LLC harks back to an earlier era in the financial world: The owner's name is on the door. Clients know that Bernard Madoff has a personal interest in maintaining the unblemished record of value, fair-dealing, and high ethical standards that has always been the firm's hallmark.”

All of the above is straight off the Bernard L. Madoff Investment Securities website. Of course you have to get behind the message on the front page from The Honourable Louis L. Stanton, Federal Judge.

Take a look at that statement above again and try to see how far the mendacity really goes. One has to wonder how this man has managed to break the old rule about fooling all the people all the time for so very long. It also begs the question as to how many other nightmares there are still to come out blinking into the sunshine. Well I have a large selection of old, and incredibly bad taste, sunspecs at the ready for them.

Not everybody was fooled though. Jim Vos, investigating on behalf of potential clients, found that the auditors, an accounting firm Friehling and Horowitz, occupied a single room (13' x 18') in Rockland County, upstate New York. Now this is an accounting operation that doesn’t even have a website!

Reports abound of the number of people who have been caught on this one, including none other than the City of London ‘wonderwoman’ herself. Yes I speak of that near deity, Nicola Horlick. Some of her comments had me reaching for the Vintage stuff I can tell you.

First up from Nicola herself, this little gem. ”It is astonishing that this apparent fraud seems to have been continuing for so long, possibly for decades.” This fooling of people in general would include you then would it Nicola? She then, amazingly, went on to claim that Madoff’s advisers said the firm had been subjected to a full-scale investigation by the US Securities and Exchange Commission twice in the past two years. Well I don’t know about you dear reader, but if I was told something I had millions in was under that kind of scrutiny, I would have exited some time back. Naturally she went on to explain her investment outfit, ‘Bramdean’ was about to redeem some money from the Madoff fund when the scandal broke. Some money? What about all of it? Then with nonchalance that confounds belief, she went on to say “I never met Madoff — he didn’t meet any investors. All contact was through these feeder funds that supplied him with the capital. The strategy we were supposedly buying into was very conservative.” So let me get this straight Nicola, you buy into something paying way over the normal rates of return, furthermore, you don’t even get to meet the sage behind this, yet you believe the statement you are buying into something very conservative. Phew, now I know where I have been going wrong all my life. Then as if that wasn’t enough, she went on to say “There was extensive due diligence being conducted on the funds by our advisers, who are part of Man Group.” This would be the same Man Group who’s shares have enjoyed a dizzying ride from £6.39 to as low as £1.69 per, in these last 12 months would it? One can safely assume this is the same Man Group with near on £240 million of its own funds deposited with Madoff. One wonders if they had the wherewithal to find out if Madoff’s Accountants were the small time operation mentioned previously. Glad to know all the experts have such a grip on matters.

A quick visit to Bramdean’s website does actually tell one everything required.

Some nuggets of wisdom include; ‘We invest on a global basis across the whole alternative assets class.’ Glad to read it, for a moment there I thought you were just handing the moolah onto others to do your work for you.

Then there is the statement ‘Diversification across a broad spread of investments is an appropriate approach to spreading the risk within an investment portfolio’. Well I never. Glad you told me that because I would never have worked that one out for myself.

Then another says ‘Well-balanced portfolios increasingly include an allocation to alternative investments’ I think less said the better, don’t you?

Finally, and chillingly, there is this statement. ‘Our door is open, please get in touch if you would like to introduce us to your funds’ I can see it now like some awful dream after too many glasses of the Vintage stuff... I lead my funds in on the collar and lead; they sit there patiently, tail wagging, while I introduce Nicola and her crew to them. “Funds, meet Nicola, Nicola, meet Funds”….”Funds! Stop that immediately you dirty beast!”

Pip pip