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A "fund of funds" (FOF) is an investment strategy of holding a portfolio of other investment funds rather than investing directly in stocks, bonds or other securities. This type of investing is often referred to as multi-manager investment. A fund of funds may be "fettered", meaning that it invests only in funds managed by the same investment company, or "unfettered", meaning that it can invest in external funds run by other managers.
Bernard Lawrence Madoff was an American fraudster and financier who was the mastermind of the largest Ponzi scheme in history, worth about $64.8 billion. He was at one time chairman of the NASDAQ stock exchange. He advanced the proliferation of electronic trading platforms and the concept of payment for order flow, which has been described as a "legal kickback". Madoff's firm had two basic units: a stock brokerage and an asset management business; the Ponzi scheme was centered in the asset management business.
Jacob Ezra Merkin is an American investor, hedge fund manager and philanthropist. He had been a fund manager and capital raiser until 2008 when one of the funds in Gabriel Capital LP, his $5 billion group of hedge funds became insolvent because a large portion of its assets was invested with the convicted Ponzi scheme operator Bernard Madoff. The fallout from his investment with Madoff has been extensive. He navigated a series of lawsuits without a finding of fraud or knowledge of the scheme, but agreed to repay any fees earned from the investment in Madoff historically. He had to resign a series of positions including his role as non-executive chairman of GMAC.
Harry M. Markopolos is an American former securities industry executive and a forensic accounting and financial fraud investigator.
Bank Medici was a bank based in Vienna, Austria. It was founded in 1994 by banker Sonja Kohn and incorporated as a bank in 2003.
Sonja Kohn is an Austrian banker.
Fairfield Greenwich Group is an investment firm founded in 1983 in New York City. The firm had among the largest exposures to the Bernard Madoff fraud.
Cohmad Securities was a US company whose main business was to introduce investors to the Bernard Madoff investment company for which it received commission based on the amount invested. The company, whose name combines “Cohn” and “Madoff,” was founded in 1985 by Bernard Madoff and Maurice Cohn, Madoff’s friend and former neighbor. Its office was located at the same address as Madoff's firm, and it employed between 10 and 20 employees with annual sales between $1M and $5M.
The Madoff investment scandal was a major case of stock and securities fraud discovered in late 2008. In December of that year, Bernie Madoff, the former NASDAQ chairman and founder of the Wall Street firm Bernard L. Madoff Investment Securities LLC, admitted that the wealth management arm of his business was an elaborate multi-billion-dollar Ponzi scheme.
Participants in the Madoff investment scandal included employees of Bernard Madoff's investment firm with specific knowledge of the Ponzi scheme, a three-person accounting firm that assembled his reports, and a network of feeder funds that invested their clients' money with Madoff while collecting significant fees. Madoff avoided most direct financial scrutiny by accepting investments only through these feeder funds, while obtaining false auditing statements for his firm. The liquidation trustee of Madoff's firm has implicated managers of the feeder funds for ignoring signs of Madoff's deception.
Recovery of funds from the Madoff investment scandal has been underway since the scandal broke in December 2008. That month, recovery trustee Irving Picard received funds from the Bank of New York account where Bernard Madoff held new investments into his Ponzi scheme. As it has been concluded that no legitimate investments were made on the investors' behalf for at least the last 12 years of operation, recovery has proceeded on a "money in/money out" basis. Investors are entitled to receive no more than the nominal cash amounts that they paid in and did not subsequently withdraw, without regard to inflation, interest, opportunity cost or the false statements that Madoff provided them. Those statements combined to a total balance of approximately $64 billion, while the admitted claims amount to $19.5 billion. As of March 2022, the trustee had recovered $14.5 billion toward these claims through legal action against Madoff associates, feeder funds and beneficiaries of the scheme, and had made thirteen distributions to investors. Additional recovery efforts by the Department of Justice have brought the total recovery to 88% of claims.
Stanley Chais was an American investment advisor, money manager, and philanthropist. He operated "feeder funds" which collected money for funds related to the Madoff investment scandal. The widow, family, and estate of Chais settled with Madoff trustee Irving Picard in 2016 for $277 million.
Thema International Fund PLC, based in Dublin, Ireland, is a Dublin-listed, Undertakings for Collective Investment in Transferable Securities (UCITS) III-certified, open-end fund incorporated in Ireland, which was launched in December 1996. It created only one sub-fund, the Thema Fund. The fund had a minimum investment requirement of $50,000.
Kingate Management is a Hamilton, Bermuda hedge fund. It was a feeder fund into the securities firm of Bernie Madoff, as part of the Madoff investment scandal.
Access International Advisors and Marketers, a Securities and Exchange Commission-registered investment advisor and a hedge fund of funds, was a research analyst investment agency that specialized in managing hedged and structured investment portfolios that involve commercial physical and biological research. It was a feeder fund into the securities firm of Bernie Madoff, as part of the Madoff investment scandal.
Tremont Group Holdings, Inc., a Delaware corporation headquartered in Rye, New York, is a hedge fund group with a subsidiary that advised a feeder fund to Bernard Madoff's investment advisory firm in the Madoff investment scandal. this was the second-largest feeder fund to Madoff's firm due to the group having had a long professional relationship with him as Chairman of the NASD, the precursor to FINRA, and as the largest options market maker on the NASDAQ.The firm was one of the largest hedge fund consultants and advisors globally during the seminal 1990's period and pioneered a number of ground breaking products such as the CSFB Tremont Hedge Fund Index, specialized products and venues for hedge fund investment; structured products, insurance entities, new markets and jurisdictions including the first institutional fund of hedge funds in Korea and the foundation of The Bermuda Stock exchange. Prominent board members and shareholders included; Mario Gabelli of Gabelli Asset Management, Leon Cooperman of Omega Advisors and Arthur Samberg of Pequot Capital Management. Tremont was among the first investors and/or involved in the launch or restructuring of numerous legendary funds such as; S.A.C., Quantum and AQR.
Aurelia Finance SA was a private bank and fund-management company in Geneva, Switzerland that was set up as a feeder fund to Bernie Madoff's illegal Ponzi scheme.
Defender Limited is an investment fund. It was incorporated in the British Virgin Islands in 2007. Defender funneled clients' funds to Bernard Madoff's firm as part of a Ponzi scheme run by Madoff. Madoff was arrested in December 2008, and pleaded guilty to fraud in 2009. He is serving a 150-year prison term.
Citco, also known as the Citco Group of Companies and the Curaçao International Trust Co., is a privately owned global hedge fund administrator headquartered in the British Virgin Islands, founded in 1948. It is the world's largest hedge fund administrator, managing over $1 trillion in assets under administration.
References
- ↑ "Genevalor, Benbassat & Cie. - Asset Manager, Switzerland". www.swfinstitute.org.
- 1 2 "Trustee Reaches $687M Settlement with Feeder Fund in Madoff Scam". Bloomberg. September 7, 2017.
- ↑ "List of Investors Hit by Madoff Meltdown". Fox News. March 25, 2015.
- ↑ Meyer, Jeffrey; Califano, Mark; Volcker, Paul (2006). Good Intentions Corrupted: The Oil for Food Scandal and the Threat to the UN. PublicAffairs. ISBN 9781586484729 – via Google Books.
- ↑ HedgeWorld Annual Compendium. HedgeWorld Limited. 2004 – via Google Books.
- ↑ Ruche, Sébastien (September 11, 2017). "A la chasse aux millions de Bernard Madoff". Le Temps.
- 1 2 Henriques, Diana B. (2011). Bernie Madoff, the Wizard of Lies. Oneworld Publications. ISBN 9781780740430 – via Google Books.
- 1 2 Keena, Colm (December 10, 2010). "Dublin-registered Thema part of complaint filed to recoup $9bn received under Madoff". The Irish Times.
- ↑ Allan Dodds Frank (February 20, 2011). "Sonja Kohn, Bernie Madoff's Bag Lady". Newsweek.
- 1 2 "Madoff looking for new money as scandal hit". Financial Times.
- ↑ Forelle, Charles (December 17, 2008). "In Geneva, Spotlight Casts an Unwelcome Glare on Banks". The Wall Street Journal.
- 1 2 "HSBC fights Madoff claim; new settlement reached". Reuters. December 6, 2010.
- ↑ Sallier, Pierre-Alexandre (December 7, 2010). "Plainte à 9 milliards contre le réseau Madoff formé par HSBC et des sociétés genevoises". Le Temps.
- ↑ "Mayer Brown defends five Lloyd's syndicates from Madoff action". Legal Week. February 11, 2014.
- ↑ "Irish fund Thema International to pay $687m to Madoff victims". The Irish Times. September 7, 2017.