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From the Opalesque Team: Fabien Pictet, founder of London-based hedge fund Fabien Pictet & Partners (www.fpictet.com), told Swiss newspaper Le Temps that fund of hedge funds (FoHFs) managers should do two things in order to avoid a ‘Madoff situation’: firstly, they must be able to contact the administrator and auditor of their underlying hedge fund managers. If they cannot do so, for any reason, then the hedge fund manager should be red-flagged. Secondly, in the case of Madoff, the broker-dealer did not charge commissions, which went to the managers and feeder-funds. The FoHFs manager should question retrocession received by banks and investment managers and whether they would entail a possible conflict of interest. “The real question to ask fund managers is: ‘how much money have you made on this product’,” he said.
Madoff did not, indeed, ask for commissions due to possible conflict of interest within its broker-dealer activity. As a result, distributors and marketers could keep the commissions. A finance professional told Le Temps, in a separate article: “Distributors could attend an influential party in Gstaad for example, talk about a Madoff fund which had found the magic formula to gain in all markets, mention that Tremont was invested in it and therefore had done all the necessary controls… and investors would ask you for subscriptions.”
Geneva has been deeply affected by the scandal, partly due to...................... To view our full article Click here
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