April 15 (Bloomberg) -- Private-equity firms and the stock market share characteristics of Ponzi schemes, “Black Swan” author Nassim Nicholas Taleb said.

Leveraged buyouts, the principal tool of private-equity investing, and buying stocks on margin should be restricted for the protection of small investors and the economy, Taleb said in a Bloomberg Television interview.

“We want economic life to be organized to be as distant from that Madoff model as we can,” Taleb said, referring to Bernard Madoff, who pleaded guilty last month to directing the largest Ponzi scheme, bilking investors of about $65 billion.

LBOs are “too close to Madoff” because “you rely on new investors to pay off the other ones,” Taleb said. “The stock market has some mild Ponzi characteristics. We have to make sure that innocent people are not harmed by this Ponzi-attribute.”

The financial system needs to be simple because regulators can’t protect investors from complex financial products, Taleb said.

“Regulators are fundamentally dumb,” he said. “Traders will go around them. I want the system where regulators can be stupid without you and I being harmed by it.”

Rare and unforeseen events are known as “black swans,” after Taleb’s 2007 book, “The Black Swan: The Impact of the Highly Improbable.” Taleb is a professor of risk engineering at New York University and also advises Universa Investments LP, a Santa Monica, California-based firm opened in 2007 by Mark Spitznagel, Taleb’s former trading partner.

To contact the reporters on this story: Elizabeth Stanton in New York at estanton@bloomberg.net; Erik Schatzker in New York at eschatzker@bloomberg.net.

Last Updated: April 15, 2009 10:50 EDT