Tuesday, 6 March 2012

Paying For Other Peoples Mistakes

So the guys who own the mets and a substantial chunk of profit from Mr. Madoff are locking horns with the Madoff trustee to decide how much money they give back in order to repay others who were less fortunate in the whole debacle. So far $80m has to be paid with another $220m if they are found guilty of turning a blind eye to the suspicions of a ponzi scheme.

I have been in two minds since reading this little piece of news as I am sure many of you are. Why should they give any money back??? Fair enough the company was involved in a ponzi scheme but as far as the investors are concerned, how are they supposed to know? Surely if the court alleges they ignored obvious warning signs, they should be imprisoned for 5 years and given an unlimited fine (POCA).

On the other hand, as the hedge fund industry isn't well regulated, are they indirectly funding criminal activity? And if that is the case, we move into yet another facet of law....

How about another thought for the road, how have they determined how much they are supposed to give back in the first place? It's not like you can redistribute all profits and end up with every investor flat on inception. After the costs associated with running the business, someone is still going to lose out, and you can be damn sure that these legal beavers aren't working for free.

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