“..Top investors ‘hit by US$50b con’..”
“..Investors scrambled to assess potential losses from an alleged $50 billion ($NZ92 billion) fraud by Bernard Madoff, a day after the arrest of the prominent Wall Street trader.
Prosecutors and regulators accused the 70-year-old, who was chairman of the Nasdaq Stock Market in the early 1990s..
..of masterminding a fraud of epic proportions through his investment advisory business, which managed at least one hedge fund.
Hundreds of people, investing with him through the firm’s clients, entrusted Madoff with billions of dollars, industry experts said.
“Madoff’s investors included captains of industry, corporations — some of which are publicly traded — that used Madoff almost as a high-yielding cash management account..
..endowments, universities, foundations and, importantly, many high-profile funds of funds,” said Douglas Kass, who heads hedge fund Seabreeze Partners Management.
“It appears that at least $15 billion of wealth, much of which was concentrated in southern Florida and New York City, has gone to `money heaven,”‘ he said.
Federal agents arrested Madoff at his apartment on Thursday after prosecutors said he told senior employees..
..that his money management operations were “all just one big lie”..
..and “basically, a giant Ponzi scheme.”
A Ponzi scheme is an illegal investment vehicle that pays off old investors with money from new ones..
..and is dependent on a constant stream of new investment.
Because the invested capital is not earning a sufficient return on its own..
..such schemes eventually collapse under their own weight..”
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