From Mark Gimein’s investigation of Paradigm:
An “Engagement Agreement” signed by Lotito, Jim Biden, and LBB Holdings, the partnership set up by the two Bidens and Lotito to buy Paradigm… promises James Biden and Lotito a “Placement Fee” of 10 percent of any money invested by clients they brought in.
Yes, you read that right. If James Biden were to bring in a $100 million pension-fund investment, a $10 million “placement fee” would be payable immediately.
In the end, no such fees were paid. But it gives you an idea of (a) how profitable hedge-fund investments are, for funds-of-funds; and (b) how big the incentives are for middlemen to go out and sell hedge funds to big investors.
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