More on Madoff: The Financial Perspective

By: Reggie Middleton | Fri, Dec 19, 2008
Print Email
Related Articles/Posts
As investment banks cut back, ...
The most successful analysts are being laid off on Wall Street. The Street as always thought of the analysis as a loss leader for M&A sales and brokerage comm...
A change is gonna' come...
Tribune filed for bankruptcy today. This, by a very smart man who sold his $12 billion commercial and residential real estate portfolio at the very tippy to...
Come join me for an evening of...
It's time to get together again. Ambition, beauty, drive, wealth, intellect, knowledge, fun - or maybe just nothing to do Friday night - come on out and mee...

Ponzi scheme operated by Bernard Madoff, a former chairman of the NASDAQ, with allegedly $50 bn of assets is by far one of the largest scam in history of financial markets. To put it in perspective, it literally dwarfs that of Enron and Worldcom/MCI in the corporate arena. With investors already battling massive losses on their investment portfolio, a scam of this magnitude could further dampen their confidence. As most of the exposure for leading banks and financial institutions towards Madoff's investment was indirect exposure in the form of clients' assets with minimal direct exposure, the potential capital loss / write-downs in the financial statements could be limited for these financial institutions. However there could be significant indirect impact in terms of future inflows and/or redemptions for their asset management and private banking division.

In the table below we have highlighted some of the entities with largest exposure in Madoff investments (both direct and indirect).

Institution Potentila loss /
Exposure type where available
US $ mn Euro € mn
Fairfield Greenwich Group $7,500    
Banco Santander SA $3,298 € 2,347 Indirect exposure - 2.3 bn Euros. Direct exposure - 17 mn Euros
Santander $2,300   Indirect exposure
Bank Medici AG $2,100    
Ascot Partners LLC $1,800    
Fortis NV $1,405 € 1,000  
Union Bancaire Privee $1,250    
HSBC Holdings Plc $1,000   Indirect exposure
AXA SA $703 € 500  
Natixis $632 € 450 Indirect exposure
Royal Bank of Scotland $623   Through trading, collateralized lending
Carl Shapiro $545    
BNP Paribas $506 € 360 Potential loss (however indirect exposure)
Banco Bilbao Vizcaya Argentina SA $422 € 300 Potential loss (however indirect exposure)
Man Group $360 € 450  
Reichmuth & Co $327    
Nomura $302   Impact on P&L virtually nil
Maxam Capital Management LLC $280    
Aozora Bank $137    
UniCredit SpA $105 € 75 Indirect exposure
Swiss Life Holding AG $79   Through fund of funds
Nordea Bank AB $67 € 48  
Credit Agricole S.A $14 € 10  
Bramdean Alternatives   9% of portfolio



Reggie Middleton

Author: Reggie Middleton

Reggie Middleton

Reggie Middleton

Who am I?

Well, I fancy myself the personification of the free thinking maverick, the ultimate non-conformist as it applies to investment and analysis. I am definitively outside the box - not your typical or stereotypical Wall Street investor. I work out of my home, not a Manhattan office. I build my own technology and perform my own research - in lieu of buying it or following the crowd. I create and follow my own macro strategies and am by definition, a contrarian to the nth degree.

Since I use my research as a tool for my own investing to actually put food on my table, I can stand behind it as doing what it is supposed too - educate, illustrate and elucidate. I do not sell advice, I am not a reporter hence do not sell stories, and I do not sell research. I am an entrepreneur who exists just outside of mainstream corporate America and Wall Street. This allows me freedom to do things that many can not. For instance, I pride myself on developing some of the highest quality research available, regardless of price. No conflicts of interest, no corporate politics, no special favors. Just the hard truth as I have found it - and believe me, my team and I do find it! I welcome any and all to peruse my blog, use my custom hacked collaborative social tools, read the articles, download the files, and make a critical comparison of the opinion referencing the situation at hand and the time stamp on the blog post to the reality both at the time of the post and the present. Hopefully, you will be as impressed with the Boom Bust as I am and our constituency.

I pay for significant information and data, and am well aware of the value of quality research. I find most currently available research lacking, in both quality and quantity. The reason why I had to create my own research staff was due to my dissatisfaction with what was currently available - to both individuals and institutions.

So here I am, creating my own research for my own investment activity. What really sets my actions apart is that I offer much of what I produce to the public without charge - free to distribute and redistribute, as long as it is left unaltered and full attribution is given to the author and owner. Why would I do such a thing when others easily charge 5 and 6 digits annually for what some may consider a lesser product? It is akin to open source analysis! My ideas and implementations are actually improved and fine tuned when bounced off of the collective intellect of the many, in lieu of that of the few - no matter how smart those few may believe themselves to be.

Very recently, I have started charging for the forensics portion of my work, which has freed up the resources to develop the site to deliver even more research for free, particularly on the global macro and opinion front. This move has allowed me to serve an more diverse constituency, which now includes the institutional consumer (ie., investment turned consumer banks, hedge funds, pensions, etc,) as well as the newbie individual investor who is just getting started - basically the two polar opposites of the investing spectrum. I am proud to announce major banks as paying clients, and brand new investors who take my book recommendations and opinions on true wealth and success to heart.

So, this is how I use my background and knowledge in new media, distributed computing, risk management, insurance, financial engineering, real estate, corporate valuation and financial analysis to pursue, analyze and capitalize on global macroeconomic opportunities. I have included a more in depth bio at the bottom of the page for those who really, really need to know more about me.

Copyright © 2007-2017 Reggie Middleton

All Images, XHTML Renderings, and Source Code Copyright ©