Friday, December 12, 2008

Bernie Madoff Scandal

On Thursday, December 11, 2008, former Nasdaq market Chairman Bernie Madoff was arrested by the FBI on fraud charges. The Securities and Exchange Commission called these charges 'stunning' and 'epic' in proportion. Accused of running a ponzi scheme with client money, Madoff, 70, apparently rang up losses approaching $50 billion.

This continues to show why the hedge fund world needs more regulation. The good news - if there is one - is the so called firm of Bernard L. Madoff Investment Securities LLC catered to the affluent. Twenty five (25) individuals with assets totaling $17.1 billion (although actual number of clients seems to be growing by the day).

As this story unfolds, wealthy investor names are being revealed. Some of the more prominent figures include New York Mets owner Fred Wilpon, GMAC Chairman J. Ezra Merkin and former Philadelphia Eagles owner Norman Braman.

What ever happened to due diligence? Individual investors are responsible for making their own financial decisions in the end. Which firm do I invest with? Vanguard? How about Fidelity? Or wait... maybe I'll use a private money manager with little or no experience... Bernard Madoff and get the name brand cache at the same time.

Madoff is best known for being a market maker. His firm simply cleared trades. A legitimate business. However, as technology emerged and profit margins shrunk, he parlayed his name into a new business model - Money Manager.

Defense attorney Dan Horwitz called his client "a person of integrity".

On behalf of his former clients and the general investment community, I think it's safe to say, "you're a thief".

If convicted, it could cost the 70 year old Madoff 20 years in jail and $5 million in fines. How about simply confiscating everything he owns and return whatever there is to his former clients?

1 comment:

Anonymous said...

I doubt he owns anything outright. Also, maybe this scheme was part of his retirement strategy.

I never "go with crowd" when it comes to money. I can definately read and ask questions. If I can't communicate with a higher up of any company b/c they think they are God, then I pull and/or do not give them my business. NEVER PUT ALL UR MONEY WHAT EVER SIZE IT IS, IN ONE BASKET PERIOD.
put him on house arrest and take his assests like they do with anyone else. That is what he is now- anyone.
Thank you.