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Digging for Madoff Evidence: 20 Million Documents in Queens

Jan 29, 2009 @ 05:14 PM By Ivy Schmerken,

While Senators grilled SEC officials this week on how the regulator missed the warning signs of the Madoff fraud, the real action in the case was occurring in a Queens warehouse.

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Psychoanalyzing Madoff

Jan 27, 2009 @ 11:19 AM By Ivy Schmerken,

Much has been written about the two sides of Bernard Madoff — the successful Wall Street trader who had the ear of regulators vs. the man who confessed to a giant Ponzi scheme that allegedly lost $50 billion and ruined the lives of thousands of investors. Now there's a theory that Madoff has the personality characteristics of a psychopath.

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John Thain’s $1.22 Million Redecorating Spree

Jan 22, 2009 @ 05:47 PM By Ivy Schmerken,

I was surprised by John Thain's sudden resignation from Bank of America where he was the head of global banking, securities and wealth management. Thain is leaving only a week after BofA’s acquisition of Merrill Lynch closed on Jan. 1st. This morning, we know this was not a resignation. Thain was reportedly forced out in a showdown with the bank's CEO Kenneth Lewis who was furious about the way Thain handled the surprise $15.31 billion fourth quarter loss that the Wall Street firm suddenly uncovered and heaped on its new parent.

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New Era in Hedge Fund Transparency?

Jan 20, 2009 @ 11:26 AM By Ivy Schmerken,

Just as President Barack Obama is expected to call for a new era of responsibility and accountability in America at his inauguration today, hedge funds and fund-of-funds are going to be asked to do the same.

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Judge Rules Madoff to Remain Free on Bail

Jan 12, 2009 @ 02:21 PM By Ivy Schmerken,

A judge ruled today that Bernard Madoff can remain free on the $10 million bail he posted and continue to live under house arrest in his luxury apartment on the Upper East Side of Manhattan while awaiting for his trial on securities fraud charges, media outlets reported.

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Judge’s Decision on Madoff Bail Due Today

Jan 12, 2009 @ 10:48 AM By Ivy Schmerken,

A Federal judge will decide today whether accused financier Bernard Madoff can remain in his luxurious apartment or whether to revoke the conditions of his bail and order him to spend time in jail.
A decision by a New York City Judge is expected around noon today, and could have ramifactions around the globe since thousands of investors both at home and across Europe lost assets in the alleged scam.

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Alternative Research Providers Buck the Contraction Trend

Jan 6, 2009 @ 10:45 AM By Ivy Schmerken,

Despite grim predictions of spending declines on investment research, some players in alternative research are seeing a reason to expand their offerings or test new models for independent research. According to Sanford (Sandy) Bragg, CEO and president of Integrity Research Associates, LLC, who posted a blog yesterday titled “Damn the Torpedoes,” there are firms whose models could do well in this recessionary environment.

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Madoff Hearing: SEC Inspector Says Possibility SEC was Complicit

Jan 6, 2009 @ 10:18 AM By Cristina McEachern,

Congress was technically not in session yesterday but that didn’t stop Representative Paul Kanjorski, a Democrat from Pennsylvania, from convening a meeting of the House Financial Services Committee on the alleged $50 billion Ponzi scheme perpetrated by Bernie Madoff.

During the meeting many lawmakers were openly calling for regulatory reform, saying they had lost confidence in the Securities and Exchange Commission. On hand to testify were David Kotz, the SEC Inspector General; Stephen Harbeck, president of the Securities Investor Protection Corporation (SIPC); and Allan Goldstein, a Madoff investor who lost his life savings.

Kotz was adamant that his office would diligently undertake an investigation of what happened within the SEC when dealing with the Madoff complaints which began years ago, as well as why the many red flags raised by Madoff’s operation went unchecked.

One lawmaker asked Kotz how sure he was that there were not people within the SEC that were complicit in the fraud and enabled it to happen, to which he replied he wasn’t sure. Kotz responded, “On its face it certainly looks as if there may be that possibility.”

But one thing glaringly missing from yesterday’s meeting was any sort of discussion addressing how Madoff was able to pull off his fraud and how he was able to continue it for so long. There was no focus on where the money Madoff purportedly stole went, or who was involved if anyone else.

There was mention that the Madoff broker-dealer arm and the investment advisory business were technically the same legal entity, and that obviously the broker-dealer arm had filed false reports with the SEC and with FINRA over the years involving it in the fraud. But no real talk about how he
defrauded all of his investors and where the money might be.

By now we all know what the “red flags” were that should have tipped off the SEC and/or FINRA to Madoff’s fraud. The small accounting firm, with one accountant for a $17 billion client; the steady positive returns even in economic downturn; the complaints raised and articles written about the supposed Ponzi scheme dating back to 1999, and the list goes on.

But how did he actually do it? Where did the money really go and who was actively involved in the fraud?

The Congressional meeting was definitely a platform for lawmakers to push for regulatory reform and what many called “a 21st Century regulatory scheme for the 21st Century.”

I’m interested in this as well, and will even be focusing a feature for the next issue of Advanced Trading on regulatory reform and what will the potential new SEC look like.

But as a trading industry observer I’d really like to know the details of how Madoff pulled it off, both in terms of the level of deception and his trading operations.

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Congress to Examine Regulatory Gaps at Today’s Madoff Hearing

Jan 5, 2009 @ 10:27 AM By Ivy Schmerken,

While there has been outrage over the Madoff scandal, so far there are questions but few answers on how the financier was able to evade detection by regulators in the face of numerous examinations and allegations. The House Financial Services Committee will hold an open hearing today to discuss Bernard Madoff’s alleged $50 billion securities fraud. The session titled, "Assessing the Madoff Ponzi (Scheme) and the Need for Regulatory Reform,” is scheduled for 2:00 pm EST.

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