Sam's now serving 22 years, but Bayou continues to make news, as The Times reports:
Goldman Sachs has been ordered to pay $20.58 million to creditors of a failed hedge fund ….Other Wall Street firms serving as prime brokers, the Times observes, may now feel obliged to better scrutinize their hedge fund clients’ activities.
The award represents the first time that a bank has been held accountable for a Ponzi scheme because of its role as a middleman.
Goldman cleared trades and lent money to the Bayou Group, a Connecticut hedge fund that collapsed in 2005, when state and federal investigators said the firm defrauded investors of hundreds of millions of dollars.
A perhaps related question, born of ignorance: As directed trusts grow in popularity, could trust companies be called upon to monitor decisions of the trusts' investment advisers more closely?
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