WSJ: From Merrill's John "Launny" Steffens to Merkin to Madoff - a Double Play to End the Inning

The sad saga of yet another investment scheme awry now that the sugar daddy has gone sour.
Ex-Merrill Executives Got Burned by Madoff

A prominent former top executive at Merrill Lynch was bullish on Bernard Madoff -- and that has cost him and a number of ex-Merrill executives.

Former Merrill chief executives Daniel Tully and David Komansky, along with former Merrill investment-banking chief Barry Friedberg, personally invested in hedge funds with Madoff exposure run by former Merrill brokerage chief John "Launny" Steffens, according to people familiar with the matter.

The Merrill executives are the highest-level Wall Street victims of the scandal to surface until now. Mr. Madoff told investigators last month that he had defrauded investors out of $50 billion in a Ponzi scheme over decades.

The disclosure comes as most Wall Street firms managed to avoid big Madoff losses. Merrill, now a Bank of America Corp. unit, and Morgan Stanley steered some clients away from Mr. Madoff because their "due diligence" teams couldn't understand the financier's opaque investment strategy. J.P. Morgan Chase & Co. yanked $250 million of its own funds from a Madoff feeder fund after a midyear review of its hedge-fund risks.

Mr. Steffens had exposure to Mr. Madoff's Ponzi scheme via investments made by funds run by Spring Mountain Capital LP. Mr. Steffens formed Spring Mountain in 2001 in partnership with J. Ezra Merkin, a top Madoff investor. Spring Mountain invested in three Merkin-led funds, and Mr. Steffens says he was aware of heavy Madoff exposure in one. more...
Among the many things that we don't understand is something mentioned at the end of the article. It seems to imply that Yeshiva University runs hedge-funds!? We did not know that.
One potential investor who met with Mr. Steffens around the time of Spring Mountain's launch said Mr. Steffens "played up" his connection with Mr. Merkin.

Spring Mountain had a hedge-fund research database with more than 5,000 different funds, including some at Yeshiva University, where Mr. Merkin headed the investment committee.

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