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Bernie Madoff and university trustees
Bernie Madoff has surely become a household word when it comes to bad investments. But he also offers an important precautionary tale for university trustees. The December 23, 2008 edition of the New York Times contained an article describing the effects of Madoff's fraud on Yeshiva University in New York, where Madoff was a trustee. According to the Times, Madoff recruited a friend to the board who then invested in funds invested by Madoff. After a reported loss of more than $100 million, the board has now had to hire lawyers to examine board procedures and governance structures to ensure best practices against self-dealing and conflicts of interest in the future.
The Madoff case surely underscores a recommendation made by ACTA at a Senate Finance Committee Roundtable on university governance: "While overlapping trustee activities can sometimes be valuable and informative, they can give rise to inappropriate transactions if the potential conflict is not disclosed. Accordingly, it is imperative that boards adopt clear conflict policies that ensure transparency in university operations."
Boards would be well-advised to take this suggestion to heart.
Posted by Noah Mamis on January 21, 2009 at January 21, 2009 10:54 AM
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