Madoff Might Not Have Made Any Trades

Boston Globe ^ | 1/15/09 | Beth Healy

[marshmallow]

A federal agency that regulates brokerage firms says there is no record of Madoff's investment funds placing trades through his brokerage operation. That leaves only two options - either he was placing trades only through other firms, which would be highly unusual, or he was not placing any trades.

"There was no evidence of the Madoff broker-dealer executing trades for the [Madoff] investment adviser," said Herb Perone, spokesman for the regulatory group, the Financial Industry Regulatory Authority. A broker-dealer is any firm that buys and sells securities.

FINRA and its predecessor, the National Association of Securities Dealers, has been examining the records of Madoff's broker-dealer operation, Bernard L. Madoff Investment Securities, every two years since the firm started in 1960. The last exam was in 2007, Perone said.

The finding is one of many facts investigators are poring over as they seek to piece together Madoff's alleged $50 billion Ponzi scheme, according to a lawyer involved in the case. Evidence that Madoff - who made his name as a trader of Nasdaq stocks - did not process any of his investment funds' trades through his own brokerage is a key indicator that he was not making the trades he claimed.

Ordinarily, a firm that owns both an investment advisory business and a broker-dealer, like Merrill Lynch & Co., would place a large portion of trades through its own broker-dealer. That's because a firm wants to earn fees on its own trades if possible. Investment firms must seek "best execution," or the best deal they can get on trades for their customers, so some trades typically will be handled by other firms. But to farm out every trade is almost unheard of.

A Madoff lawyer, Daniel J. Horwitz, declined to comment on Madoff's trading.

[muawiyah]

So, if Bernie Madoff was not making trades there were never any trading irregularities for the SEC to investigate!

I think we have a clue about what's going on here ~

[TruthShallSetYouFree]

Trades? We don't need no stinkin' trades!

[Paladin2]

It’s totally absurd that the SEC would not have known this, especially after their “investigation”.

[DManA]

He still filed false financial reports. The big question is why didn’t the SEC find this suspicious. It’s like a Mack Seennet comedy. A buy in a mask, beret, and a striped shirt wearing a sign saying “I am a crook” walks by a Keystone Cop, tips his hat and walks on as the cop beams.

[muawiyah]

If I give you a billion dollars and you just stick it in a wall safe what is there for the SEC to investigate?

Madoff simply stole the money ~ that's a job for the FBI. The complainants were going to the wrong agency!

[muawiyah]

Did he file any financial reports at all? When you’re stealing peole’s money why would you do something foolish like that?

[Just mythoughts]

So, if Bernie Madoff was not making trades there were never any trading irregularities for the SEC to investigate! I think we have a clue about what's going on here ~

Please explain. Why would people invest thinking there was 'trading' taking place? Geeeze this mess is so out there I am not even sure what questions to ask... Was there ever 50billion in the first place?

[org.whodat]

I'm starting a new fund, It is called the green stamp premium fund. You give me your money and I will give you green stamps. Only selected donors may apply.

We are not going to handle any small trash on the ground floor!!!

[lexington minuteman 1775]

So if there were no trades does that mean that much of the 50 billion is out there in some hidden offshore accounts somewhere?
You take this guys case and the case of the guy that parached from his plane over Alabama last week and you have to wonder how many of these guys are out there and how could people be so careless with what might be life savings?

[muawiyah]

Madoff took money in. He also paid some money out. He simply never invested any of it anywhere ~ although folks assume he has a stash somewhere (which might not be the case).

He gave his "customers" simple reports that just made up stuff.

You could do this with nothing more elaborate than a pre-printed formal letterhead, Quicken and an inkjet printer.

One guy.

[Mr. Lucky]

Ummm, no. Madoff’s firm was selling participation investments which didn’t exist.

[org.whodat]

Was author anderson his CPA’s!!!!

[org.whodat]

Next week we plan on opening the Green Stamp Hedge Fund Division.

[rbg81]

On the contrary—this is the equivalent of missing the elephant in the living room. How could any SEC investigation failed to have noticed that he wasn’t making any trades? Looking at trades should have been the first step in any investigation and should have raised HUGE red flags if uncovered.

[DManA]

Maybe a more accurate scene is a guy in a mask, beret, and a striped shirt carrying a bag of loot tosses a Keystone cop a wad of cash and the cop pockets it and turns his back.

[DManA]

There had to be bribes paid to the very top of the SEC. This is the scandal of the century.

[bronxboy]

Hey, how would they find time...after all the got that master criminal Martha Stewart(sarcasm).

[muawiyah]

His clients were "told stuff", none of it true. First, remember this, nothing is normal about any of this. He lied to people and they gave him money. He felt no guilt because, as it turned out, they were greedy and knew doggone well no one can guarantee a 15% return year in and year out.

Madoff must have been a Gypsy changeling ~

[17th Miss Regt]

that's a job for the FBI

Or maybe the "Russian" mafia. That is why he wears kevlar to court.