Posted on 01/15/2009 6:30:54 AM PST by 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.
(Excerpt) Read more at boston.com ...
There may be an offshore account. Bernie may yet escape jail if makes restitution...he could return the original investment. This would cost less than 50 billion.
However, he was paying out about 10 % a year to investors and living high on the hog so there not be any money left.
Why would he have risked making actual trades when he had a sure thing going. It would only have complicated matters.
Dem cover up is a real likelihood. However, the beauty of him having never made any trades would be that the government wouldn’t be on the hook for any of the money the liberals lost. This would be a pure con scheme.
If only this scrutiny were applied to our criminal government!
He took money in from new clients, kept a percentage as a fee, and paid the rest out to existing clients as returns. No need to make trades. It works as long as you can keep bringing enough new money in every year. The government calls this Social Security. ;)
I don't see how this is anything other than GROSS NEGLIGENCE on the part of the SEC. If complaints were indeed filed (and I understand from news stories that this is the case), the most cursory of investigations would certainly include a review of trades that Madoff made.
This is going to damaging causing more knee-jerk regulations like Sarbanes-Oxley. People confuse poor oversight with too-little oversight. There's plenty of regs already on the books, we just have incompetent, life-long civil servants enforcing them.
Right, and since the SEC was/is incompetent, that means the Government needs to make the Madoff “investors” whole again.
I bet some of the money is out there hidden, but the majority of it (probably) went to pay earlier investors.
The SEC had no idea how much money Bernie had flowing through his hands ~ and he didn't tell them. So whatever they looked at, being a far greater sum than any of them had, looked "pretty big".
Bernie tricked them.
The Mob does something similar ~ they compartmentalize their activiies. They have a cappo running the whores and booze, another one deals in dope, another in stolen luxury cars, someone else with the unions, and another manages investments in legitimate businesses ~
Now, what does a mobster do with his nieces and nephews who want nothing to do with crime? In my experience they get trucking companies, printing plants, art studios ~ that sort of thing. And if you look at the records ol'Guido doesn't have a share in the business ~ it's all 100% upfront Guido's nephew.
Still, Guido's nephew knows who sent him to college, and what he'll do if he screws up. And there are those all important blood ties ~ having a mobster in the family means all his relatives are held hostage every day of their lives.
Madoff ran his operations kind of like that. I doubt the relatives (his sons, wife, etc.) had any idea how much he'd stolen ~ but I also doubt they were totally ignorant of what he was doing "on the side".
Please give the criminal the credit for outsmarting the cops, ‘cause he did!
Where do you keep 50 billion ? So he held the $$$$ off shore and now “can’t remember” exactly where?
So it was a really low-risk strategy after all!
No doubt Madoff, by himself, was responsible for at least one recent devaluation of the rubel ~ but we don’t know anything about that scam ~ probably like the one or two he ran here but the Russians aren’t going to admit they got suckered too.
These people are still deluding themselves. There were no investments made. Period. That was obvious from the moment this story broke.
No SPIC coverage here...period.
No one noticed that his Trading firm made no trades? No one ever asked for a record, not even for tax purposes? Surely his employees had to know this was a fraud. Bribery seem like the only logical explanation for why this guy is not in jail.
No one noticed that his Trading firm made no trades? No one ever asked for a record, not even for tax purposes? Surely his employees had to know this was a fraud. Bribery seem like the only logical explanation for why this guy is not in jail.
It's quite a bit like high ticket bunco. Bernie had an advantage over most conmen in that he was a registered broker, had a world of experience in high finance, knew how stuff is regulated, and so on.
Other guys have run this one ~ and then died leaving it in the hands of the probate court to settle with the "investors". Bernie simply lived longer than he expected.
So did any of the investors deal directly with Madoff? And how did the investors invest... cash or check ? And wasn't there some guy that was his front man that went around enticing investors to invest? Sounds like there may be no literal money trail directly to Madoff, and the so called investors may have to provide the evidence they invested in the first place.
There was never $50 billion to begin with. Maybe a few billion (although my guess is less than $1 billion), was actually invested with Madoff. Some of that money went back to early investors to keep the scheme going, the remainder has been hidden in Madoff's "sock drawer".
In the big scheme of things, it isn't that difficult to hide a billion or so - just ask Yasser Arafat. He stole at least that much from the PLO over twenty years.
ANALYSTS: FIRM SENT CLIENTS 'DATED' INFO
NY POST, By MARK DeCAMBRE and KAJA WHITEHOUSE, 12/17/08
EXCERPT The performance statements that fallen Wall Street big Bernard Madoff's firm sent to clients appear riddled with inaccuracies and other suspicious signs that should have raised red flags, according to experts who've reviewed the documents obtained by The Post.
For example, one statement that's part of a Nov. 30 performance report suggests that Madoff's outfit purchased shares of Apple at $100.78 on Nov. 12. However, even when accounting for a usual three-day settlement period, the stock never traded at $100 a share. Its trading range on the day that the shares were supposedly bought was between $90.01 and $92.43, sources noted. Such inaccuracies appear throughout the performance statement.
In another case, the Madoff statement reflects the purchase of Citigroup shares at $12.51 on Nov. 12, even though the stock that day traded in a range between $9.52 and $10.63. "Everything's a couple bucks off," said Jonathon Trugman, founding partner of New York hedge fund Pendulum Capital Management, who reviewed the documents but did not invest with Madoff. "To find something as glaring as the price of Apple stock, what more do you need?" said Trugman.
Others note that Madoff used an outmoded bookkeeping method to record his performance data, and added that his presentation, which lacks details, harkens back to an earlier period before investors demanded more disclosure.
"These look like statements from the mid '90s at the earliest," said New York attorney Ross Intelisano, who's been retained by Madoff clients who've lost money. "If I was [Madoff's] client, I would be very dissatisfied with the quality of the reporting." Added Bob Ellis, a brokerage analyst with research firm Celent, "This is a very bad retail account that doesn't give you very much information. There's hardly any information here about realized or unrealized gains. "None of the other wire-houses or independent firms would have used this old accounting style," he added.
The lack of transparency is surprising since Madoff was considered a friend to regulators and a huge supporter of full disclosure.
One forensic accountant who spoke with The Post said he also noted that Madoff's client statements appear to have been printed using an outdated "impact printer," which haven't been in widespread use since the advent of laser printers. They even pre-date the dot-matrix printers used in the 1990s. "It's just odd for a guy managing $17 billion to being using this sort of technology," the accountant noted.
Others added that one of the more striking red flags to jump out were the deficiencies in Madoff's overall strategy. "You're trying to get above-market returns by buying the bluest of the blue chips, and the truth is the largest of the large-cap stocks move proportionately the least because they have all their information factored into them," Ellis said. "It's just not a strategy that generates above-market returns."
SOURCE http://www.nypost.com/seven/12172008/business/analysts__firm_sent_clients_dated_info_144523.htm
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