Protect Yourself in Post-Madoff Investing World

There is a certain fascination in watching the growing list of sophisticated investors who were taken in by the alleged $50 billion investment fraud perpetrated by Bernie Madoff. It's the kind of weird emotion that makes people stop to gape at the scene of a traffic accident, or follow a fire engine.

The names of those scammed range from Steven Spielberg and Jeffrey Katzenberg of Hollywood fame, to some of the world's largest banks like HSBC (HBC Quote) and Banco Santander (STD Quote). And it also includes hundreds of retirees and many charitable foundations as well as the country-club set in Palm Beach and New York.

How could so many wealthy, sophisticated investors (and investment advisers) have missed the now-apparent red flags? And, more importantly, if they could fall victim, how can you, the ordinary investor, make sure you don't get involved in a scam? ...