Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

Bramdean Alternative exposed to Madoff's '$50bn fraud'

Nicola Horlick's Bramdean Alternative has admitted indirect exposure to a hedge fund company which saw its director arrested by the FBI yesterday over an alleged $50 billion (£33.34 billion) fraud.

The trust has 9.5% of assets in the Defender and Rye Select Broad Market XL Portfolio funds, both of which had trading accounts with Bernard Madoff Investment Securities.

Madoff, a former chair of Nasdaq, is said to have confessed to employees ahead of his arrest this week that the company was a giant ‘Ponzi Scheme’.

Similar to a pyramid scheme, a Ponzi fraud relies on continuing inflows of client money to payout unsustainably large amounts to earlier investors.

‘There is no innocent explanation,’ Madoff is said to have told FBI agents as they arrived at his  Manhattan home. ‘[I] paid investors with money that was not there.’  

The US Securities and Exchange Commission is also conducting an investigation into the company. The ultimate losses from the company remain unknown.

The figure of $50 billion was supplied by Madoff himself to investigators, admitting that his company was effectively insolvent, and had been for several years  

SEC head of enforcement Linda Thomsen said: ‘We are alleging a massive fraud, both in terms of scope and duration.

‘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’

Established in 1960 Bernard L. Madoff Investment Securities is one of the US’ leading market makers which counts several leading hedge funds and European banks among its clients.

A separate investment advisory business is believed to have had around $17 billion (£11.33 billion) under management. An unidentified employee told investigators that they believed that clients had requested redemptions of around $7 billion in recent months.  

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Liontrust ESG head says sustainable investment doesn't mean low return

Liontrust ESG head says sustainable investment doesn't mean low return

Peter Michaelis talks about ethical investment growth and where he sees future opportunites.

Play Are platforms the biggest barrier to wealth manager ETF take-up?

Are platforms the biggest barrier to wealth manager ETF take-up?

Citywire hosted a roundtable discussion to find out how and if wealth managers are using ETFs in their clients' portfolios and the challenges they face trading through different platforms.

Play SVM's Veitch on what's next for banks

SVM's Veitch on what's next for banks

SVM fund manager Neil Veitch is finding value in what he describes as unstable financials and talks through his favourite small caps.

Read More
Your Business: Cover Star Club

Profile: UBS' robo boss on what his tween can teach the industry

Profile: UBS' robo boss on what his tween can teach the industry

Co-head of UBS SmartWealth Shane Williams explains the simple life lessons missed by the first wave of robo pioneers

Wealth Manager on Twitter