Essay Example on Bernard Madoff was a former chairman of NASDAQ stock Exchange









INTRODUCTION Bernard Madoff was a former chairman of NASDAQ stock exchange He started his investment advisory firm on his own He has be guilty for the defrauding of the investors of amount 50 billion which he was running the biggest Ponzi scheme for around two decades In 2008 December when there were economic disturbances and meltdown in the United States Madoff couldn't carry his functions and satisfy his Investors requests of cash He decided to come clean and accept the fraud he has committed The Wall Street has collapsed due to the Ponzi scheme as it was the massive investment fraud which has affected many people including the high profile investors And also the fraud scam has left more than 12 000 investors and many faking investment returns over the years Madoff has taken in client assets and transferred it to his personal accounts He mailed out fake account statements to hide the ruse When clients came in to withdraw the funds he uses to acquire recently acquired capital from other investors In the marketing point of view he had sold his product to clients as a hedge fund by promising performance at a consistent rate whatever the market conditions would be Circumstances surrounding the exposure 

Due to the good reputation in the community of financial services many of them has invested their saving of life with in the Madoff advisory firm Large bank firms and pension funds were scammed by Madoff Madoff Investors included some of the big charitable organizations funded by Actor Kevin Bacon owners of New York Mets etc Banks such as Spanish bank HSBC British bank Royal bank of Scotland were scammed The Madoff victims list was developed by the wall Street journal where the individual investors ended up with nothing and on streets The charge of securities fraud has landed Bernard Madoff sentenced to 150 years of maximum security prison The scandal being the world's largest fraud ever had its effect on the destruction of wealth in the United States and also internationally This had led to billions of dollars in write downs and huge losses to the financial institutions It has threatened a chain of default by financial institutions and industrial corporations Role of SEC in failing to detect the fraud The Securities and Exchange Commissions of New York was under fire for failing to uncover a 50 billion Ponzi scheme of Bernard Madoff s despite a point on tip by a whistleblower The SEC by 2008 mid December has understood that creditable and legit allegations of Madoff wrongdoing was brought to the attention of SEC staff but it has failed to perform action and take charge of the allegations made Sometime during 1999 the chairman of SEC Christopher cox has asked the inspector general of office to look into the allegations made by performing an investigation on Madoff and the reasons why the allegations made were not credible 

The investigation has taken place on terms of relationships between the SEC staff and Madoff family and also has reviewed what investigation work was conducted The investigation has showed that SEC has received number of information in described manner and ample number of complaints for the examination of Madoff Though the investigation has taken place twice and examination thrice the detailed and competent investigation was never performed During the investigation suspicious data has been detected and caught Madoff in contradictions but SEC has disregarded and simply asked Madoff about it And in turn when Madoff had implausible explanations they have accepted it on the base of face value The information received by the SEC has required information but couldn t be solved without detailed examination During the examination the SEC has found that the Madoff mysterious hedge fund has been making huge amount of money than the known market making operation Yet none has identified this as a cause for the concern The investigation team made a quite alarming discovery that Madoff's fund business was surprisingly making more amount of money than the expected and more than his known market operations In addition to this none of them identified this revelation to cause a problem or a raise for concern

The two of investigations had been performed at a similar timing in different offices without knowing about it Madoff has informed one of the examination team that one investigation has already been performed and they have received the information they are looking for This has resulted in failed opportunity to uncover the scheme 16years before it was confessed At the end the lead examiner has said that the Madoff scandal is an exposure of corruption and complicity on the government regulatory agencies part While some of the claims say that the SEC missed the risk because of understaffing Even then the counter opinion was clear management rules and searching for clear answers with timely follow up could have helped in knowing this fraud before it was out of hands The investigation internal report of SEC stated that the agency has missed several opportunities to discover Madoff s criminal actions Moreover claims from external sources has states that SEC is not sufficiently risk focused and it has repeated incompetence and holds SEC liable The conclusion marks that the agency had failed to open up the warnings given about the fraudulent activities said Jacob H Zamansky a criminal defense lawyer We can clearly say that Madoff s cleverness had led him to fleece many investors out of billions of dollars for many decades and the fact that the SEC agency never took the required steps but just the basic measures to check if Madoff was performing a Ponzi scheme

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