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Serge Lhabitant and Greg N. Gregoriou have published a new White Paper "Madoff: A Riot of Red Flags", which is available at the link below.

Greg N. Gregoriou is Professor of Finance at the State University of New York (Plattsburgh). Francois- Serge Lhabitant is Professor of Finance at the HEC University of Lausanne and at the EDHEC Business School. The views expressed in this paper are exclusively those of the authors and do not involve any of the entities they may be associated with.

For more than seventeen years, Bernard Madoff operated what was viewed as one of the most successful investment strategies in the world. This strategy ultimately collapsed in December 2008 in what financial experts are calling one of the most detrimental Ponzi schemes in history. Many large and otherwise sophisticated bankers, hedge funds, and funds of funds have been hit by his alleged fraud. In this paper, we review some of the red flags that any operational due diligence and quantitative analysis should have identified as a concern prior to investing. We highlight some of the salient operational features common to best-of-breed hedge funds, features that were clearly missing from Madoff's operations.

Why rumors should not be ignored In the close-knit hedge fund community, noise and rumours are plentiful. Unless they can be rebutted swiftly and decisively, with clear and verifiable evidence, they should not be ignored, particularly when they last for severa......................

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