Beware cults of personality

What can we learn from the spectacular frauds perpetrated by Bernie Madoff and Marc Dreier, two professionals with stellar reputations in their fields? In hindsight, the lack of transparency was stunning. In the case of Madoff, no one knew what really happened on the 17th floor, where the asset management unit in question worked. He controlled so much himself, and it's clear he went to enormous lengths to create the façade of propriety. His elaborate fake trading statements were stunning works of art. In the end, his sons turned him in.

Dreier, too, ran a secretive law firm. He also controlled so much himself, that in many deals, he was said to be the only one who knew how it all fit together. In the end, his downfall was sparked by a suspicious receptionist. The moral here is that you buy into the cults of personality at your own risk. Transparency is a far superior quality.

Related Articles:
Bernie Madoff news from FierceFinance
Marc Dreier news from FierceFinance
Transparency news from FierceFinance