the father of all the ponzis

from
http://www.ft.com/cms/s/0/e8294d3c-ccef-11dd-9905-000077b07658.html

Pomerantz, a New York law firm, said it was building a case on behalf of clients, and it was “increasingly apparent that investors who invested with Madoff indirectly through one of his related ‘feeder funds’ may have a basis for legal redress, against those funds and their auditors”.

Many of the other big US lawyers have also been instructed by victims to put together cases and find deep-pocketed companies to sue.

However, auditors say they are entitled to take on trust the word of custodians of assets.

Cindy Fornelli, executive director of the Center for Audit Quality, the US audit lobbyist, said fund accountants were responsible for ensuring money was “disbursed to the firms it invested in.”

“It is not the auditor’s responsibility to audit the underlying investments of the firms the capital management firm invests in. As an example, if the firm you’re auditing invests in AT&T, you’re not responsible for auditing AT&T.

“Rather, the existence of the underlying securities is verified with a third party, which in this case was a respected and SEC-registered investment adviser who was a former head of Nasdaq.

“In our view, the Madoff matter demonstrates why more light is needed in areas not currently regulated in our capital markets.”

BDO Seidman pointed out it did not audit Madoff Securities. It said its “audits of Ascot Partners conformed to all professional standards and we will vigorously defend ourselves against these unfounded allegations”.

PwC and Ernst & Young declined to comment. KPMG said: “Our work conformed to all professional standards.”