For years, investors, rivals and regulators all wondered how Bernard L. Madoff worked his magic.
But on Friday, less than 24 hours after this prominent Wall Street figure was arrested on charges connected with what authorities portrayed as the biggest Ponzi scheme in financial history, hard questions began to be raised about whether Mr. Madoff acted alone and why his suspected con game was not uncovered sooner.
As investors from Palm Beach to New York to London counted their losses on Friday in what Mr. Madoff himself described as a $50 billion fraud, federal authorities took control of what remained of his firm and began to pore over its books.
But some investors said they had questioned Mr. Madoff’s supposed investment prowess years ago, pointing to his unnaturally steady returns, his vague investment strategy and the obscure accounting firm that audited his books.
“As through this world I’ve wandered, I’ve seen lots of funny men;
Some will rob you with a gun; And some with a fountain pen.”
Woody Guthrie
I repeat the comment I made on an earlier entry (where it was the only comment): Where in the world were the regulatory authorities? If people in the industry could see that the returns were doubtful and unsustainable, why did it take the authorities so long to act? From the UK (FSA) to the US (SEC) it often seems as if the regulatory authorities are the last to know. And then they have the gall to say that it is because they need more staff and more money to do the job properly. The job that the previous staff and money seemed incapable of doing. Forgive my spleen. Never good at any time and especially on a Sunday.
There’s no jail dark and dank enough for this cretin.
[i] There’s no jail dark and dank enough for this cretin [/i] —Jeffersonian [#5]
If he’s out on bail, then at least one of his ankles needs a bracelet.
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
[i] If people in the industry could see that the returns were doubtful and unsustainable, why did it take the authorities so long to act? From the UK (FSA) to the US (SEC) it often seems as if the regulatory authorities are the last to know [/i] —Terry Tee [#2]
Another anti-government rant. Two responses.
First, if it were so obvious to “people in the industry . . . that the returns were doubtful and unsustainable,” then how did Madoff manage to raise so much money from so many otherwise savvy people?
Second, if you want to convict Madoff, you need to prove his guilt to a jury beyond a reasonable doubt. That requires a much stronger case than the SEC would need to shut down his business by administrative enforcement action. The more quickly you shut him down, the less evidence of his crimes you may end up with. Prosecuting major financial crimes cases takes a lot of work, which which will go for naught unless you can offer a story that jurors understand and find compelling.
To answer the first question of Irenaeus: (a) greed often over-rules everything else, yes, even in financial experts; (b) a good deal of the money came from private investors. Irenaeus’s next point, however, goes to the nub of a problem encountered here in the UK as well: complex financial cases tried before randomly selected juries pose many problems. It might be wise for us to find other ways to police our financial services.