The layers and layers of Madoff feeders boggles the mind. Bloomberg reports that Citigroup (C) and Morgan Stanley (MS) had $1.8 billion of client cash invested in Union Bancaire Privee, which in turn invested with Fairfield Greenwich, which of course was all Madoff.
With the billions these two firms manage, we’re not surprised that some of it ended up with Madoff, but even if there were no Ponzi, there’s still a scandal here: Investors are paying three levels of management fees. Citi, UBP, and Fairfield, and if Madoff had been a real manager, he would’ve charged real fees too, so that’s four levels.
Again, even if the end investor is totally legitimate, the clients of Citi and Morgan Stanley are getting royally hosed when their money is filtered through so many levels.