...admitted exposure to date:

(data from FT Alphaville)

Denunciations of the US regulatory regime for not detecting the scheme have been prominent over the weekend. In the UK the loudest has probably come from Nicola Horlick of Bramdean Alternatives who had 10% of funds under management with Mr Madoff.

There is, as usual, a depressing lack of self-blame by such professional money managers. Everyone claims, legal ramifications uppermost, that they (or, more helpfully for our Learned Legal Friends, qualified proxies) undertook amazing due diligence. It must therefore be the fault of regulators.

Regulators will doubtless carry their fair share of blame. But the most interesting question remains one of fiduciary duty. Investment fund clients do not make contracts with market supervisors.

So how exactly does a fund carry out thorough due diligence on what is in all essence a black box system pleading commercial secrecy?

It, I submit M'Lord, cannot. Next to the alleged and astoundingly stable returns of over 1% per month come rain or shine marketed by Mr Madoff it appears only the prudent and intellectually honest honoured their fiduciary duty to protect and preserve clients' capital in the face of the uncertain and unknown.

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