Lessons to be learnt from the Madoff fraud

In association with Hedge Fund Intelligence

The brouhaha surrounding the huge fraud perpetrated by Bernie Madoff could hardly have come at a worse time for hedge funds.

Performance in general was deeply disappointing in 2008. Even if the industry did on average beat the returns in most asset classes, a significant majority of hedge funds were negative on the year. And with an increasing number imposing gate provisions or suspending redemptions, all too many managers have also got themselves into highly fractious relationships with their investors or their prime brokers, or both.