The year was only a few days old when French bank Societe Generale unveiled Jerome Kerviel as the trader who had lost some $7.1bn in alleged unauthorized derivatives trading. A few weeks later, and Bear Stearns was gone. Within 6 more months AIG had been bailed out, Lehman Brothers went belly up, Merrill Lynch had to be saved by Bank of America, and Goldman Sachs and Morgan Stanley became bank holding companies. But that wasn't it for the year.
A few weeks back Citi was bailed out (twice), and several other large financial institutions (including Bank of America, Goldman and Morgan Stanley) were given US government cash to beef up their balance sheets. Along the way, some 170,000 financial markets professionals lost their jobs. And just as we crawled towards Christmas and a well-earned break, there was Bernie Madoff and that alleged $50bn investment fraud.
And the Madoff affair has now taken a tragic turn, as Thierry De La Villehuchet, the co-founder of Access International, which is said to have had all of its $1.4bn in assets invested with Madoff, was found dead by security personnel at his desk in Manhattan early Tuesday. De La Villehuchet, 65, is said to have been discovered with his wrists slit. A bottle of sleeping pills and a box-cutter utility knife are said to have been nearby. Although no suicide note was found, police do not suspect foul play. New York Police Commissioner Raymond Kelly said that the financier was discovered alone 'with his feet propped up on his desk (and) a trash pail nearby to collect blood'.
De La Villehuchet is also believed to have had some of his personal money with Madoff. An unnamed person close to the deceased told La Tribune: 'He had been searching day and night for a way to recover the funds of his investors....He couldn't bear the blame game that broke out...It's a farewell from someone who had nothing to be ashamed of....The truth is that everybody wanted to invest with Madoff, who was considered by all as triple A'.
In the meantime, Bloomberg reports that investors who withdrew funds from Madoff's operations over the last 6 years face lawsuits for the return of the money. The news agency quotes Lynn LoPucki, who teaches law at Harvard University, who said: 'Right now, there are Madoff winners and Madoff losers. Before this is over, there will be nothing but Madoff losers'.
Finally, The Times reports that Fairfield Greenwich Group, the hedge fund believed to have lost $7.5bn in the scandal, has already been sued by investors alleging negligence.
Sources - Bloomberg, CNBC, Reuters
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