We hereby initiate our deathwatch for Bernie Madoff’s largest sales organisation, the “fund-of-funds” known as Fairfield Greenwich Group, which assembled $7.5 billion from global investors for Bernie to vaporize.
The day Bernie announced his Ponzi scheme, FGG did have about $6 billion of assets that it had invested with other managers, so it will probably protest its own solvency for a while. But we suspect FGG’s hold over these assets is not long for this world.
Now that FGG’s clients have realised just how effective FGG’s vaunted due diligence processes are, we imagine they will rapidly be pulling the rip cords. Especially now that FGG’s principals will be spending thousands of hours preparing for litigation instead of rubberstamping investment managers.
And there’s also the problem with clawed-back fees. FGG-Madoff clients likely paid FGG about $100 million a year in exchange for Madoff’s fantasy returns. If we were one of those clients, we would certainly want that $100 million back (at the very least, the part that was paid for “performance.”)
Fairfield Greenwich Group, we hardly knew ye.
Fairfield Greenwich: Our Research Processes Are Unbelievably Rigorous
The Real Reason Fairfield Greenwich Group Blew $7.5 Billion On Madoff
Madoff Loser Fairfield Greenwich Group Trying To Find Scapegoat: Sues Own Auditor