Department of "Huh?"
Alex Berenson and Diana Henriques:
Now Accused of Fraud, Wall St. Wizard Had His Skeptics: The collapse of Mr. Madoff’s firm is yet another blow in a devastating year for Wall Street and investors. While Mr. Madoff’s firm was not a hedge fund, the scope of the fraud is likely to increase pressure on hedge funds to accept greater regulation and transparency and protect their investors...
Five paragraphs later:
Mr. Madoff was not running an actual hedge fund, but instead managing accounts for investors inside his own securities firm. The difference, though seemingly minor, is crucial. Hedge funds typically hold their portfolios at banks and brokerage firms like JPMorgan Chase and Goldman Sachs. Outside auditors can check with those banks and brokerage firms to make sure the funds exist...
Surely this is an argument for more hedge funds? For more separation of portfolio and custodial functions?
