What Do Uma Thurman, Charities, Mansions, and Bernie Madoff Have In Common?
Suppose you were on the cover of a popular business magazine with Uma Thurman on your arm and the headline read, "Charmed Life." You're a bigshot fund of funds manager, you give "millions to charities," jet between mansions, and your ex is Elle Macpherson. You're the poster boy for success in the world of money and influence. Clients have entrusted you with more than $10 billion, and you like to rip into underperforming hedge fund managers to show that you are different. Bloomberg quotes you as saying, "If these managers are not focused on preservation of capital, they should not have the right to manage other people's money."
Then, your facade is blown. Your clients are told that, despite the fact that it's your job to perform due diligence on other fund managers, you just lost them $230 million by investing with Bernie Madoff. Yes, that Madoff -- the one who had red flags following him everywhere. The Bernie Madoff that was the subject of Harry Markopolos's decade-long whistleblower effort, the Bernie Madoff that Goldman Sachs wouldn't touch with a ten-foot pole, the Bernie Madoff that Yale chief investment officer David Swensen says Yale was not even close to investing with because of the many red flags.
What would happen? What if you dismissed it by saying, "There's only so much due diligence you can do." Surely you would not still be in business, or would you?