Wednesday, December 17, 2008
Some Biig Gonstermachers
Those hot shots on Wall St who had the secret to riches beyond your dreams were just phoning it in. That is, until Bernie Madoff confessed.
The Fairfield Greenwich Group charged clients an annual fee of 1 percent of assets invested for providing access to exclusive hedge funds and performing due diligence on them, in addition to a fee of 20 percent on investment gains each year, according to people close to the fund’s operations. At that rate, an investment of $7 billion paid Mr. Noel’s company $70 million annually, and then $140 million more in a year in which Mr. Madoff reported a 10 percent gain (he steadily reported returns of 10 to 12 percent).Why do the work yourself if Bernie was doing such a good job? Besides, Bernie's a mensch, a man you can trust to the end. Perhaps they should have bought the Eiffel Tower instead.
Other middlemen for Mr. Madoff’s vehicles — like J. Ezra Merkin and his Ascot Partners fund and Gerald Breslauer, a financial adviser in Los Angeles who invested with Mr. Madoff on behalf of Steven Spielberg and Jeffrey Katzenberg — also collected millions in fees, though they may have had different arrangements.
Mr. Merkin and his Ascot fund took 1.5 percent of assets.
The Tremont Group, a unit of Oppenheimer that is in turn owned by MassMutual, had $3.3 billion with Mr. Madoff, while Optimal Investment Services of Geneva, a unit of Santander of Spain, puts its exposure at $3.1 billion. Other big investors include Kingate Management at $3.5 billion, Union Bancaire Prive of Geneva at $1 billion and Bank Medici of Vienna at $2.1 billion, demonstrating the worldwide reach.
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