Read the Hecht v$.$ And$$ver Assoc. Mgmt$.$ Co$.$ case in Ch$.40.$ In that case, the Andover LLC hired Ivy as a consultant, who recommended using Bernie Madoff as an investment manager. Initially unknown to investors, Madoff used funds from subsequent investors to pay earlier investors, without actually making trades in the security market to generate profits. Eventually Madoff's Ponzi scheme was discovered in a high$-$profile security fraud case.

Which of the following was the lesson learned from this case?

A$.$ Only Ivy has liability for failing to document trades and preparing books of entry without trade tickets; the Andover Assoc. Management Co$.$ was not liable for the negligence of Ivy, an independent contractor.

B$.$ The Andover Assoc. Mgt$.$ Co$.$ was liable for disregard for the rights and safety of Andover investors through grossly negligent oversight over Ivy, who failed to reconcile Madoff's monthly statements with bogus trade tickets.

C$.$ Investor beware $-$ neither Andover or Ivy have liability for the losses of the investors.

D$.$ The business judgment rule protected Ivy from liability because he did not actually know of the fraudulent scheme when he invested $25\%$ of Andover's assets with Madoff.