The New York Times article disclosing court documents that indicated that J.P. Morgan was skeptical of Bernie Madoff’s “profits” sheds light on the worst kept secret on Wall Street. Hell, all of Wall Street seemed to know something was off in Madoffland, even the Securities and Exchange Commission. For J.P. Morgan, it seemed according to this story, it became the epic battle of fighting for big revenue opportunities and protecting the firm’s exposure to risk. As we learned from the financial debacle, avoiding risk typically loses in that battle. When the Madoff ponzi scheme was brought to light, a fund manager told me: “We had money with [Madoff]for a year long time ago and finally pulled it out. We never could figure out how he was making the returns he divulged. That was the only red flag we needed.” Apparently J.P. Morgan needed more….
