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Monday, January 26, 2009

Bernard Madoff: The Fine Print

Drafting documents clearly and correctly is not the type of exciting legal action featured in books, movies, or on the news. That's why a recent story in the Financial Times caught my attention. The story discussed the warnings contained in some of the prospectuses of feeder funds that turned money over to Bernard Madoff.

The fine print in one hedge fund said, ""There is a risk the broker-dealer could abscond with those assets,"" according to the FT. Another fund told investors ""information supplied by the investment adviser may be inaccurate or even fraudulent."" A third said, in block capital letters and bold type: ""Participation by investors in the fund should be considered a high-risk investment.""

So there are those few folks out there who drafted these documents and are probably feeling good about that bit of work. And as noted in the FT story, investors are now probably wishing they had taken more seriously the words "abscond", "inaccurate", "fraudulent" and "high-risk".

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