Investors who were smart enough or lucky enough to withdraw money from Madoff before last week's events may be forced to pay money back according to Reuters.
"Because of a legal concept known as "fraudulent conveyance," they could be forced to return their profits and even some of their initial investments to help offset losses incurred by others entangled in the long-running Ponzi scheme."
I never heard of "fraudulent conveyance" until last night. If this transpires as some legal pundits are speculating, it amounts of even further disincentive for anyone to invest in private partnership. There already exists no guarantee that you won't suffer big losses, as many funds have this year, no regulation to speak of in practical terms, no SIPC or FDIC protection, huge fees and the prospect that you may be gated, or delayed/denied getting your money. Add to that this retrospective profit-plus-principal-give-back risk and the whole proposition gets even worse.