In 1992 the SEC investigated a Madoff feeder fund.

In May, 1999 and again in 2005, Harry Markopolos, money manager and investment investigator, presented his research on the Madoff Hedge Fund to the SEC in which he concluded that the fund was a giant Ponzi scheme…

“I used the Mosaic Theory to assemble my set of observations. My observations were collected first-hand by listening to fund of fund investors talk about their investments in a hedge fund run by Madoff Investment Securities, LLC, a SEC registered firm. I have also spoken to the heads of various Wall Street equity derivative trading desks and every single one of the senior managers I spoke with told me that Bernie Madoff was a fraud.”

Nothing happened.

In Warren Buffet’s 2002 letter to his stockholders he said,

“We try to be alert to any sort of mega-catastrophe risk, and that posture may make us unduly appreciative about the burgeoning quantities of long-term derivatives contracts and the massive amount of uncollateralized receivables that are growing alongside. In our view, however, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.”

Nothing happened.

But you know all this; you’ve been reading and hearing about it for weeks, so why am I bringing it up yet again?

Because the lesson we all need to learn from this is not to ignore the stuff that makes us uncomfortable; the information that doesn’t fit with our world view; the messy stuff; the unhappy stuff. Large, small or miniscule, it needs to be dealt with, not left alone to grow larger and larger until it overpowers everything around it.

Because when stuff is ignored it doesn’t go away, it gets worse.

Because that’s what leaders do, they deal.

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