George Fontanills and Larry McMillian proved you can start out making decent money trading options and turn that into a million dollar fortune by writing books and giving seminars and selling worthless trading signals.
i play various classic board/card games competitively and all my opponents who are or have been traders were options traders. Options just give more opportunities.
I pretty much get the rights of investors/partners. However, is he not subject to SEC supervision because of number of partners or way it was sold or both? I recall complaints that the SEC ignored, however, would they have discovered the fraud had they enforced their right (if they have it) to audit them?
Hedge funds, for the most part, are not subject to SEC regulation. I think there were suspicions of fraud which was why a complaint was raised. But hedge funds still can operate outside government regulation thanks to the exceptions listed in the SEC laws and statutes.
The SEC investigation was sheer incompetence. 1/2 a dozen inquiries and examiners were sent in twice and Madoff lied through his teeth. Answers given to the first investigatory team contradicted responses to the second and there was no follow up on these inconsistencies. One hand of the SEC had no clue what the other was doing (had done). They failed to request subpoena power and relied on documents provided by Madoff. LOL... After being caught, Madoff commentedthat he was stunned that he was able to BS his way through the examinations. They had him dead to rights and couldn't connect the dots.
i think a more interesting questions is are there any firms running really profitable ATS purely on options. Not market making but actual strategies to trade the vols etc.. you would think there should be tons of them but i really havent heard much "gossip" about any at work.