My misguided Indian friend.......

I was engaged in a discussion on one of the clubs I belong to on Ecademy today about, you guessed it, Bernie Madoff.

One of the other members taking part was from India. He had some very interesting points to make:

Regulation was to blame, the US was not as well regulated as India, it would never happen in India and so on.

While I agree that it appears that regulation or lack thereof did play a large part I don't think that any other country has better regulation than the US.

And, as you can always say for the USA, they are taking very quick, public action to correct the situation

and they are replacing the head of the SEC.

Never happen in India, I wonder.

It is a  little disturbing that a very well qualified man, a CPA etc, can display hubris of this magnitude. 

That is what got us in the dung in the first place.

Wake up man, it happens everywhere, even India.

If Bernie the Bold had decent Auditors it would never have happened.

What are they smoking in India?

What about the failure of the auditors of the feeder fund and investors? Do they not have a responsibility to look after their clients interests?

ALL the auditors screwed up, every single one of them and anyway you can NEVER rely on an auditor to prevent fraud, at best they find out what has already happened so you can stop it happening again and you can fix the problem.

Auditors are not proactive they are reactive, it goes with the job description.

The auditors of all the investors are in the dwang in any event, they are going to be taken to the cleaners. Sued to death.

And anyway you only have to look at ONE other current story, that of Mr Stein Bagger, CEO of the IT Factory in Denmark to see the absolute nonsense in the contention that decent auditors would have prevented the fraud.

Our friend Stein was audited by Deloitte and KPMG, he had a loan from the largest Danish Bank (a State bank), was a very close partner of IBM AND he was made the Ernst and Young's "Entrepreneur of the Year' on the day he fled the country.

Now there is a story to bring tears to your eyes if you are the emotional type.

One of the quotes of the year comes from Ernst and Young who said:

"We feel deceived," said Søren Strøm, head of Ernst & Young's "Entrepreneur of the Year" program, in a statement. The accounting firm, he added, is "unable to understand the last few days' developments."

Unable to understand?

That an easy one Soren, he took the money and bolted!

I would add embarrased and ashamed to the list if I was them. Do they know about due diligence in Denmark?

What is it that Ernst and Young does again?

We must always remember that it OUR money that money managers and funds invest. We have the responsibility to ensure that our professional advisors do what they are supposed to do.

It's our money after all.

Then my friend from India closed with a racist remark about "the Jews who manage The Swiss Banks"

Very regrettable but unfortunately common, particularly with this story, have a look at "Antisemites feast on Madoff misery"

No, the Jews are NOT responsible albeit Mr Madoff is a Jew, the Jews were in fact the major individual losers.

This attitude sickens me, I find it personally repugnant, and you should be ashamed of yourself.

As long as we indulge in hubris, naivety, blame laying, greed, justification, ego and anti-Semitic diatribes we will continue to be taken in by fraud schemes.

We need to take responsibility for our own investments, do the homework and rely on "them" to look after us.