By now you have probably heard the name Harry Markopolis. Mr. Markopolis is the investor who repeatedly tried to get the SEC to investigate Madoff over at least a ten year period. Obviously, it was a fruitless effort. That didn't stop Harry from telling collegues and associates to steer clear of Madoff though. One such investor who placed $1.5 billion of clients' money with Madoff was Theirry de La Villehuchet, cofounder of Access International Advisors, a French money manager. Mr. de La Villehuchet sadly took his own life days after the Madoff fraud was discovered.
The truly bizarre part of this story (as if a widely suspected $50 billion Ponzi scheme isn't bizzare enough) is that one Mr. Littaye, who is Mr. de La Villehuchet's parter, says his firm conducted thorough due diligence. According to the Wall Street Journal article where I'm getting this from, the firm required candidates for outside money managers to undergo a handwriting test with a graphologist.
Ok. Breath. Yes, I am as astounded and disgusted as you right now. How could anyone rely on such nonsense and call it due diligence? They might as well channel the SEC through a medium next time to check records! Really? A handwriting test? Puhleaze. Personally, I am outraged that a) anyone in a position of such fiduciary responsibility would actually use such nonsense, b) that anyone would actually give their money to someone using such a device (to be fair, clients probably didn't know this) and c) that anyone- particularly Access' attorneys- would think such BS could be possibly considered due diligence in a court of law. The last point in particular tells me Access is full of monkeys without brains and I know absolutely nothing else about them.
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Moving on, there is one bit of somewhat honorable news regarding Madoff recently. Banco Santander SA, a large Spanish bank, is offering its clients $1.8 billion because of the Madoff debacle. According to the WSJ, the bank's clients had $2.3 billion with Madoff, but institutional clients are not eligible. The offer consists of preferred stock in Santander with a value representing the client's original investment. One catch: clients must agree to keep all their deposits and current business with the bank and agree not to sue. The shares will no doubt be worth significantly less once trading begins as they carry just a 2% dividend and there is currently no market for them. Just how fair and honorable is this? You be the judge.
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