In the report, Madoff: A Riot of Red Flags, authors François-Serge Lhabitant and Greg Gregoriou highlight some of the salient operational features common to best-of-breed hedge funds - features that were clearly missing from Madoff's operations.

The Edhec position paper looks at the events leading up to the fraud and considers how the alleged split-strike conversion strategy would have worked before exploring the due diligence aspects of the case in detail.

Among the areas which should have been seen as a concern, the authors say, were both operational red flags - lack of segregation amongst service providers, obscure auditors, an unusual fee structure, heavy family influence, lack of disclosure and insufficient staff - and investment red flags - black-box strategy, questionable style exposures, incoherent 13F filings and excessive market size.

To read the report click here.