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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New York (HedgeCo.Net) – Former chairman of the Nasdaq Stock Market Bernard Madoff was arrested yesterday and accused of orchestrating a ponzi scheme that bilked some $50 billion out of investors, authorities say.

The founder of Bernard L. Madoff Investment Securities allegedly has been running the scheme for years, using new money coming into the fund to pay returns to other investors, keeping up the façade of an admirable performance.   In his alleged confession to the FBI, Madoff took the blame, saying he “paid investors with money that wasn’t there.”

According to the SEC complaint, Madoff informed two senior employees at his firm yesterday that he was “finished,” and that his business is “all just one big lie,” and “basically, a giant Ponzi scheme.”  He also allegedly admitted that the firm was insolvent and had been for years.

“We are alleging a massive fraud – both in terms of scope and duration,” said Linda Chatman Thomsen, Director of the SEC’s Division of Enforcement.  “We are moving quickly and decisively to stop the fraud and protect remaining assets for investors and we are working closely with the criminal authorities to hold Mr. Madoff accountable.”

Madoff, 70, posted bail at $10 million, backed by his Manhattan apartment and guaranteed by his wife.

"Bernard Madoff is a longstanding leader in the financial services industry," his lawyer Dan Horwit told reporters outside the Manhattan courtroom. "We will fight to get through this unfortunate set of events."

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

HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com

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