$50 billion fraud hits Wall Street
As if the situation in the financial sector was not bad enough it has been reported that a $50 billion investment fund run by Bernie Madoff has collapsed and been revealed to be nothing more than a pyramid scheme. However the marketing of the fund was such that investment banks and investors from all around the world were literally queueing up for slice of the action and have all taken severe hits.
The scheme was targeted at individuals, charities and hedge funds that were chasing returns in excess of 10% per annum. If any individual investor had been chasing so-called guaranteed returns of this level in any market, let alone the current economic downturn, alarm bells should have been ringing. Quite why some of the leading investment companies in the world were sucked into the pyramid scheme remains to be seen but the asset bases of many of the major banks around the world have been slashed yet again.
The fact that investors were chasing returns in excess of 10% highlights the greed factor which has become a major part of the investment community of the modern era. There are some who were suggesting potential cases of negligence over the role of some investment advisers although everyone seems to have been the victim of a systematic fraud.
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