MAR/Hedge (RIP) Page 1
No. 89 May 2001
Madoff tops charts; skeptics asks how

By Michael Ocrant

Mention Bernard L. Madoff Investment Securities to anyone working on Wall Street at any time over the
last 40 years and you’re likely to get a look of immediate recognition.
After all, Madoff Securities, with its 600 major brokerage clients, is ranked as one of the top three
market makers in Nasdaq stocks, cites itself as probably the largest source of order flow for New York
Stock Exchange-listed securities, and remains a huge player in the trading of preferred, convertible and
other specialized securities instruments.
Beyond that, Madoff operates one of the most successful “third markets” for trading equities after
regular exchange hours, and is an active market maker in the European and Asian equity markets. And
with a group of partners, it is leading an effort and developing the technology for a new electronic auction
market trading system called Primex.
But it’s a safe bet that relatively few Wall Street professionals are aware that Madoff Securities could
be categorized as perhaps the best risk-adjusted hedge fund portfolio manager for the last dozen years. Its
$6–7 billion in assets under management, provided primarily by three feeder funds, currently would put it
in the number one or two spot in the Zurich (formerly MAR) database of more than 1,100 hedge funds,
and would place it at or near the top of any well-known database in existence defined by assets.
More important, perhaps, most of those who are aware of Madoff’s status in the hedge fund world are
baffled by the way the firm has obtained such consistent, nonvolatile returns month after month and year
after year.

(...)