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Hedge Funds, Other Large Institutions Burned By Madoff

New York (HedgeCo.Net) – Just days after what could prove to be the largest Wall Street sham in history, investors that were burned by Bernard Madoff are coming forward in droves.

Spanish bank Santander, along with French bank BNP Paribas both detailed their exposure to the alleged ponzi scheme on Sunday.  Santander estimated it had just over $3 billion tied up in the firm, while BNP Paribas has about $470 million at stake. 

"While BNP Paribas has no investment of its own in the hedge funds managed by Bernard Madoff Investment Services, it does have risk exposure to these funds through its trading business and collateralized lending to funds of hedge funds," BNP said in a statement.

Santander’s exposure came from a sub fund of their Optimal Fund, called Optimal Strategic US Equity, which used Madoff Securities for their investments. 

A handful of hedge funds have also come forward in the wake of the scandal.  Fairfield Greenwich Group released a statement on Friday saying they were still trying to assess their losses, but estimated they had about $7.5 billion, or half of its total assets, tied up in Madoff’s firm as of November.  Founding Partner Jeffrey Tucker said they were “shocked and appalled by this news.”

Tremont Capital Management also had a hefty amount invested with Madoff through their fund of funds.  “Needless to say, our level of anger and dismay over the apparent betrayal by Mr. Madoff and his organization of his 14-year relationship with Tremont is immeasurable,” Tremont stated in a letter to investors on Friday.

Also coming forward on Friday was Maxam Capital Management, who reported losing $280 million through Madoff-linked investments. 

Bernard Madoff, owner of Bernard L. Madoff Investment Securities and part founder the Nasdaq stock market, was arrested and charged on Thursday with orchestrating a $50 billion scam that targeted some of the most reputable hedge funds and affluent individuals in the business.  The 70-year-old allegedly ran a large ponzi-scheme where new money coming in is used to pay off existing investors, creating the false notion of peak performance and admirable returns. 

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

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