Summary
I have always maintained that you have to pull a single thread to tear a cloth or unravel a fraud. This has now started happening in the Madoff case. The timing of certain transactions of JP Morgan appears to be the thread and in my opinion will have far reaching effects. JP Morgan is a name with a chequered history and has always (to my knowledge) acted in the best interests of investors as well as the capital markets. A century back it effectively played the role of the Fed in the crisis of 1907-8. In this analysis I look at how times have changed and where the thread is indicating it may lead in the Madoff fraud.
Analysis
1. The referred article says that JP Morgan exited the Madoff funds while not alerting a certain group of investors. JP Morgan was not legally obliged to inform these investors but in retrospect it may have saved a lot of pain to the global financial ecosystem if it had.
2. The fact that there was information available to a certain group of analysts last fall which if shared may have saved a disastrous fall in the value of the Madoff funds is a vital thread.
3. The fact that this thread was not used to alert JP Morgan's own investors puts a question mark on the nature of advice which leading investment bankers give their constituents.
4. This vital piece of information should also give forensic accountants, auditors and lawyers a vital lead into how the Madoff Ponzi scheme operated.
