Lessons learned from the Mad­off scan­dal

Cecil Whig - - COMICS & PUZZLES -

What can we learn from that Bernie Mad­off char­ac­ter? He’s the guy who pulled off a $50 bil­lion Ponzi scheme by rip­ping peo­ple off for decades, claim­ing to be in­vest­ing their for­tunes, pay­ing them in­ex­pli­ca­ble re­turns on their money and all the while steal­ing from them blind. There are sev­eral im­por­tant lessons we all need to learn from this bit of his­tory.

Num­ber 1: Know what you own. No mat­ter what type of as­sets or in­vest­ments you have, make it your busi­ness to know ex­actly where your money is. If your fund man­ager or bro­ker can­not give you an ex­pla­na­tion you can un­der­stand, that is not nec­es­sar­ily a re­flec­tion on you; it could be that per­son is more un­sure than you are. Keep ask­ing ques­tions, keep re­search­ing and keep dig­ging, and don’t stop un­til you are able to de­scribe each of your as­sets and in­vest­ments in 25 words or less.

Num­ber 2: Know who’s man­ag­ing the store. Mad­off’s clients were too trust­ing when they handed their money over to this mys­te­ri­ous stranger. I can imag­ine that the mys­tery sur­round­ing the old gent gave some of them some kind of weird con­fi­dence. That was dumb.

Num­ber 3: Don’t fall for un­be­liev­able deals. Re­mem­ber the old adage: If it’s too good to be true, you can bet that it is. Get rid of your lottery men­tal­ity. There are no get-rich-quick deals out there. If you think you see one, fig­ure out what it re­ally is; then run.

Num­ber 4: Trust, but ver­ify. I don’t know what kind of an­nual ac­count­ing doc­u­ments and records Mad­off’s clients re­ceived, but now we know that what­ever they may have re­ceived was all fake. A mod­er­ate ef­fort on his clients’ be­half to ver­ify their tax re­turns would have prob­a­bly shown the truth.

Num­ber 5: Don’t as­sume some­one else will pro­tect you. There’s no doubt the Mad­off crowd as­sumed they had some kind of pro­tec­tion against be­ing stung by a scoundrel. Af­ter all, most se­cu­ri­ties pro­fes­sion­als and oth­ers carry in­sur­ance to cover clients in the event of an em­bez­zle­ment scan­dal.

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