Question

At what point should people be excused for accountability with poor investment choices? For example , in the case of Bernie Maddoff, he was convicted and required to make restitution. Should he have been required to do so, or should that be the responsibility of investors?

Answer 1

There are two kinds of accountabilities in question here, one is that of the investors and one is that of the fund manager. The accountability of the investor should be to ensure that he understands what the fund manager is doing in terms of white paper and where he intends to put the money and make returns for the investor. The investors cannot go no and check if the fund manager is doing what he claims he is doing so his accountability is limited by that of understanding that what the fund manager claims to do is no ponzi scheme.

Now coming to the accountability of the fund manager, he has to ensure that his ways of making investment is understood by the people who provide him with the funds. He has to ensure that he sticks to the methods intially mentioned.

Coming to the question of conviction and requirement to make restituition, the fund manager should be convicted if he deviates from the initial plan of making returns. But if the initial plan itself sounded like a ponzi scheme, then it should be upto the investors to take up the blame for making a bad investment in the first place rather than putting the blame on someone .