Posts filed under 'Madoff Scam'
Washington’s top cop for Wall Street, hamstrung by bureaucracy and inexperienced investigators, failed to thoroughly pursue multiple warnings about Bernard L. Madoff’s multibillion-dollar Ponzi scheme, according to a scathing new critique of the Securities and Exchange Commission by its internal watchdog.
The report, issued Wednesday by the commission’s inspector general, offers the first detailed examination of one of the agency’s most public embarrassments.
It says the SEC received repeated allegations that Madoff was probably cheating investors, including detailed road maps provided by outside businessmen, only to fail to discover the fraud.
The SEC opened inquiries five times in a 16-year period. But in each instance, inexperienced officials, at times ignorant of other agency probes into Madoff, took his explanations at face value and did little to verify them.
Madoff himself told the inspector general that he was “astonished” that the SEC did not verify whether he was carrying out the billions of dollars of trades he claimed to be making after he supplied the agency with account details.
“The SEC never properly examined or investigated Madoff’s trading and never took the necessary, but basic, steps to determine if Madoff was operating a Ponzi scheme,” the inspector general, H. David Kotz, concludes in the report.
The extensive number of contacts between the SEC and Madoff raises questions about whether the agency is capable of spotting and stopping other financial frauds. The SEC has said it doesn’t have the resources necessary to oversee the exploding number of financial firms and can review many of them only once every few years. It became aware of Madoff’s fraud only when he confessed to it in December.
The financial crisis has exposed many breakdowns in regulation, but none has involved such a large fraud by a single person. The inspector general’s report “makes clear that the agency missed numerous opportunities to discover the fraud,” SEC Chairman Mary L. Schapiro said. “It is a failure that we continue to regret, and one that has led us to reform in many ways how we regulate markets and protect investors.”
The Bernard Madoff Files: A Chronicle of SEC Failure – Washington Post
September 4th, 2009
Somewhere back around 1946 or 1947, Nick Etten–by now a pretty much forgotten first baseman for the Yankees–signed a one-year contract in the amount of $15,100. This sum struck many observers as an odd number, but not one canny New York baseball writer, possibly Red Smith. “The $100,” he wrote, “is for fielding.”
That pretty much sums up my reaction to the 150-year prison sentence handed out to Bernard Madoff. As I assay the punishment-to-crime ratio implicit in the judge’s decision, I attribute 25 years as penal recompense for Madoff’s particular peculations–his swindling of a few thousand institutions and individuals–and the balance of 125 years as society’s get-even for Wall Street’s recent crimes against humanity, for which Madoff can stand as an almost perfect symbol.
We cannot get at Stanley O’Neal, or Jimmy Cayne, or Joseph Cassano and his merry band of AIG rogues, or Dick Fuld–men whose actions and recklessness ultimately led to the destruction of trillions of dollars of personal wealth and the hopes and necessities that wealth was intended to underwrite and secure.
We cannot get at Goldman Sachs, which seems about to report as profitable a quarter as any in its history, a fact which, under the circumstances, will rank, if true, with the greatest moral obscenities and perversions of process I have witnessed in what is now starting to feel like quite a long life.
But we can get at Bernard Madoff, and if he must stand proxy for the fury we feel at Wall Street, and for our frustration that the real malefactors not only seem beyond adequate punishment, but are being rewarded with non-dues-paying membership in a tight little club of taxpayer-financed vulture finance, then so be it: 150 years and every penny for Madoff, not a nickel nor a month from the real bad guys.
This is not to say I don’t feel Madoff’s victims’ pain. Not possibly, not to that extent, to be sure. I am not bankrupt. But every morning now, when I arise, the first thing I do is some simple arithmetic that suggests I no longer have resources adequate to get me to my grave, assuming the actuarial tables are correct. Until last December, I never heard the name “Madoff.” I owned good stocks. The people who advised me never for one second showed themselves deficient in intelligence or good faith. And yet here I am.
Is Bernie Madoff Really Worse Than Dick Fuld? – Michael Thomas, Forbes
July 6th, 2009
Though he claims to have acted alone, it took more than a fountain pen to pull off his massive fraud.
Don’t Be Fools: Bernie Madoff Didn’t Act Alone – Randall Forsyth, Barron’s
July 2nd, 2009
The central problem being played out among Madoff victims is that only a small fraction of the nearly $65 billion that disappeared has been recovered. While insurance will fill some of that gap, it is clear that many people will not come close to recouping their losses — meaning that whatever one group of investors get will affect how much is available for another group.
Ever mindful that the claims process is, in effect, competitive, some groups of investors are jockeying for favorable treatment from the Securities Investor Protection Corporation, the government-chartered insurance agency.
Investors Compete for a Piece of the Madoff Pie – New York Times
June 30th, 2009
