This is what I don't understand about hedge funds...I was an auditor of a smaller hedge fund and when we would look for new investment opportunites I would go to each company and audit their books and look at how they were investing. If anything did not add up we walked. I know we did not invest in a very large Phoenix based company because of this and we saved ourselves loads of money and trouble when the owner killed himself and the company was sued.
So...when all of these Pedigree fund managers were looking into Madoff why would they invest when things never really added up? Just because he had a track record of returns he must be ok?? Where did that get you?