5 Biggest Hedge Fund Failures

1. Madoff Investment Securities

Unsurprisingly, topping the list of the 10 biggest hedge fund failures is Madoff Investment Securities, led by Bernie Madoff. Bernie Madoff, one of the most influential people on Wall Street, had under him what was the biggest hedge fund at the time. He would simply take money and proclaim to invest it, while keeping the money in his own bank accounts. However, he would also report fictitious profits, which were high enough for the investors to accept without questioning, with said investors also paying taxes on these fictitious profits. However, Madoff realized in 2008, that the liabilities were far too much to pay off, and get out from the hole he’d dug himself and so, confessed to his sons, who reported him to the authorities. It is estimated that the fraud was worth nearly $65 billion and Bernie Madoff ended up being sentenced to 150 years in prison as well as restitution of around $170 billion. Even now, this is said to be the biggest investment scandal in history as the biggest hedge fund in the world turned out to be a glorified Ponzi scheme, duping investors of tens of billions of dollars.