Katz Sapper's embarrassment

December 17, 2008
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Yesterdayâ??s disclosure by KSM Capital Advisors that its clients might be out $15 million from the alleged Madoff scandal probably wonâ??t be the last local fallout. At minimum, it has been a stressful and embarrassing time for a respected Indianapolis firm.

Some very good minds from around the world thought so much of Bernard Madoffâ??s returns that they actually begged him to invest their money. Others thought they smelled a rat when his returns didnâ??t contract with market downturns, and quietly stayed away.

KSM didnâ??t directly invest with Madoff. It placed the money with another firm, which sent the money to a third firm that in turn invested with Madoff.

To what extent do you blame KSM, or its parent, Katz Sapper & Miller, for the nightmare? Any lessons to learn?
  • KSM didn’t directly invest with Madoff. It placed the money with another firm, which sent the money to a third firm that in turn invested with Madoff.

    Nice, so a fee on top of a fee that is on top of yet another fee that was invested with a guy (Madoff) who made money on the commissions and didn't charge a fee. Sure was nice of Madoff not to charge a fee and only charge a commission on the trades placed. One could say that Madoff has better morales than KSM. I wonder if it was explained to the clients that a fee was going to be charged on top of a fee that was charged on top of a fee that was investing with a guy that was charging commissions. KSM did you explain the series of fees to your client?
  • KSM put their own corporate money into these funds.....it is not unheard of for a money manager to have good returns, but the problem is that as accountants, they should have been watching what was being put out...remember this, this people who are really responsible for this fraud being undetected is the SEC...and they know it. How many other companies out there, who are not as slick or fraudlent as Madoff are out there.....don't be surprised if people start liquidating funds to cash....
  • How would you expect any return with so many people taking a clip?
  • Remember the good ol days when CPA firms just did accounting and tax work...when banks made home & auto loans instead of GMAC...when there was one high school state champion...when one had to be fouled to make 3 points...oops, I digress.
  • Yahoolarry.. you make me sick. do you invest money? i thought so, do you have someone else manage it? i thougtht so. why? because you aren't smart enough to do it your self. and neither am i, however i understand how other people make money. because they are good at what they do and i realize that i am not as good at as they are. which is what we call business. fee's make the world go around. this isn't KSM's fault at all. SEC. blame them. if you are so angry at a salesmen that makes a commission... try being one. you apparently aren't... sound more like dead weight that is angry at others success.

    again....NOT KSM'S FAULT....SEC!!!!
  • Isn't it predictible that the investors relied on YARMULKES instead of doing some due dilligence before investing ?
    Religion is not research.
  • Doug, sorry if I make you ill. I want you to know that I'm not anti-fee or anti-commission. Folks need to make a living and I understand that. What I don't understand and don't know is how the fee structure works at KSM and the TWO middle men. Madoff only charged a commission per WSJ. In theory you could have started with $100 at KSM and by the time KSM and the TWO middle men charged fees you only have $95 to invest and then Madoff starts charging commissions on top of that. You need to be one heck of an investor to overcome 5%+ in friction. Did KSM clients understand that 5% is being taken off the top for access to Madoff?
  • KSM is just as greedy as Madoff. Blaming the SEC is laughable, they are understaffed and overwhelmed with corporate greed.
  • Didn't certain partners at KSM go long in Brightpoint when the Brightpoint bondholders were cashing out in lieu of imminent bankruptcy?

    Sounds like Karma to me.

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