This is the reason why the Google search that Hogan asked for came up so empty, and probably explains why the analyst was scrabbling around a bit to find anything which suggested that Madoff was a Ponzi. He surely read the Barron’s article, in other words, but he didn’t see in it what Zames saw.

The Barron’s piece seems to have been quite widely read by people interested in Madoff — but mostly the takeaway seems to have been that investing in his funds was a great way of participating in genuine if ethically dubious returns.

Zames, however, read the piece a different way, and came away thinking Ponzi. This probably helps us understand why Zames is now the head of Interest Rate Trading, Global Foreign Exchange, Public Finance, Global Mortgages, Tax-Oriented Investments, and Global Fixed Income at JPMorgan, and touted as a possible successor to Jamie Dimon—while the hapless junior analyst is probably off Wall Street altogether.

Picard clearly goes too far when he says that Hogan “learned from Zames that it was well-known that Madoff was operating a Ponzi scheme.” But it’s surely fair to say that Zames thought “Ponzi” when he heard “Madoff,” as a result of reading the Barron’s article. And since he drew that conclusion, he naturally reckoned that lots of other readers of the article had thought the same thing.

All of which goes to prove that financial sophisticates don’t read the financial press in the same way that the general public does. It’s entirely possible that even Arvedlund herself didn’t suspect Madoff of being a Ponzi. But Zames, perspicaciously, saw that in her piece all the same. Whether that makes JPMorgan complicit in the Madoff fraud is now the subject of some extremely expensive litigation. But there’s a lesson here for financial journalists, which is well worth remembering: bankers don’t confine their reading to the literal meaning of what you write. They infer, and extrapolate, and they assume that everybody else is doing that as well.

Financial journalists, rightly, spend a lot of time trying to be very clear about what they’re saying, in an attempt to be as accessible as possible to people who aren’t financial sophisticates. But in many ways it’s more interesting to wonder what the likes of Matt Zames will think when they read any given piece. What a story says, it turns out, depends a very great deal on who exactly is reading it.

Felix Salmon is an Audit contributor. He's also the finance blogger for Reuters; this post can also be found at