Bernie Madoff (with your money)

In any other year this may have been THE story of the financial year. Times are so mad that this story which broke on Friday was barely even the story of the day.

http://news.bbc.co.uk/1/hi/business/7779442.stm

Lots of mainstream banks, through "fund derivatives" provided investment products that aimed to pay attractive yields based on the Madoff fund but attempting to preserve capital at the same time. The only situation where capital wouldn't be protected would be where the value of the fund fell off a cliff, exposing the banks that made the product to big losses. Wooops, that's just happened.

Fascinating story. This guy Madof was revered in certain circles and has been for decades.

People don't investigate successes.

Quite a few doubting articles on the net from upwards of a decade ago querying not just the overall level of his success, but the fact it was steady month-on-month profit, without the peaks and troughs everyone else encountered.

Lack of effective due diligence on investments (of many types) is one of the real lessons of the last year. The government can't do it all themselves, nor should they. Although in this case the SEC would want to have a long, hard look at themselves...

Click

Quote:

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US financier Bernard Madoff has been sentenced to 150 years for running Wall Street's biggest and most brazen bogus investment scheme.

The courtroom erupted in cheers and applause as US District Court Judge Denny Chin imposed the maximum possible prison sentence on the 71-year-old defendant.

Madoff pleaded guilty to securities fraud, mail fraud, wire fraud, investment adviser fraud, three counts of money laundering, false statements, perjury, false filings with the SEC and theft from an employee benefit plan.

Investigators do not know how much was stolen, according to court papers. Prosecutors say $170 billion flowed through the principal Madoff account over decades, and that weeks before the financier's December arrest the firm's statements showed a total of $65 billion in accounts.

The trustee winding down the Madoff firm has so far collected $1.2 billion to return to investors.

Mr Madoff's brother, Peter, and his sons, Mark and Andrew, held executive positions in the brokerage unit of Madoff's firm. Their lawyers say they were not aware of or involved in the crooked asset management side.

Mr Madoff has said all along that he committed the fraud on his own. He has not named any accomplices. The only other person charged is his outside accountant.

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So he committed the fraud all on his own. ROLMAO. :eek:

Is it not unbelievable that after more than 2,000 years of alleged civilised society we still have situstions like this where the herd mentality rules all logic ?

There is a set of people involved in this Madoff thing who reported him to the SEC as a Ponzi scheme, based largely on scientific research.

I work in the financial industry but even, dare I say, with my experience, the technical analysis was beyond most people but investment professionals and concerned an analysis of Madoff's stated strategy and how it was impossible to do what he did.

But, it was the whistleblower whose career was hurt and whose reputation was damaged for crying wolf.

This, like most of the bubble is an abject failure of management. Look at all of the companies who have lost huge amounts money (not my employer thankfully, who is a very conservative bank) and this is a failure of collective management and individual management.

Unfortunately "management", of which I am one, is over valued and under appreciated. Over valued in terms of the badge of integrity and skill you automatically get because who are "management" and under appreciated because like many things, it is easy to do it badly and extremely difficult to do it well.

OK - had that moment and am now moving on to something equally important, like Totty Watch