kaal:claim:2811718-025

Fund managers were incentivized to route capital to Madoff because he charged notoriously low fees for the hedge fund business, taking only transaction fees rather than fees based on assets under management.

Source quote, verbatim

Fund managers were incentivized to invest in this manner because Madoff charged notoriously low fees for the hedge fund business (charging only transaction fees rather than fees based on AUM)

From

Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016), III.B.3. Impact of the Madoff Ponzi Scheme, p. 41
https://ssrn.com/abstract=2811718 · source PDF

Cite as

Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718

Holds when

Madoff feeder funds and funds of funds before December 2008

Classification

mechanismsupport: arguedrisk-and-incentives

Verify

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