Chidem Kurdas
An appeals court upheld the Madoff trustee’s decision that the former clients of the defunct firm have a claim only to the capital they originally invested, not the profits Madoff fraudulently reported on their accounts. This has precedent from past Ponzi schemes, where investors who took out more than their capital had to return the difference. It’s a reasonable principle not to allow fake profits, though a hardship on people who relied on them, like New York Mets owners Fred Wilpon and Saul Katz. The supposed gains, after all, came from other investors’ money.
But there’s something else going on. (more…)
HedgeFundSmarts 