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Madoff Might Not Have Made Any Trades
Boston Globe ^ | 1/15/09 | Beth Healy

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 ...


TOPICS: Business/Economy; Crime/Corruption; News/Current Events
KEYWORDS: bernardmadoff; fraud; madoff; ponzi
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To: muawiyah

You don’t have to be a genius, just pay bribes to the right people. Oldest trick in the book.


41 posted on 01/15/2009 7:15:20 AM PST by DManA
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To: bronxboy
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.

Well if Bernie was slick enough to deceive people out of their money he is not likely to have a paper trail to an off shore account.

42 posted on 01/15/2009 7:16:26 AM PST by Just mythoughts (Isa.3:4 And I will give children to be their princes, and babes shall rule over them.)
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To: Hacklehead

Again, this con didn’t take employees ~ it took Bernie, a little late night work at the keyboard, and good software from Staples!


43 posted on 01/15/2009 7:16:26 AM PST by muawiyah
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To: muawiyah
Muawiyah, we are probably on the same page on many things regarding this pathetic character, but the one thing I simply cannot concur is that he did it on his own. The 'one guy' part that you assert.

Sure, with Quicken, half an hour, and a bottle of cold soda, I could come up with an investment statement that would win me a free ride at art school, and a set of numbers that would make Benjamin Graham smile, and then send it off. Thus, Madoff could easily come up with some statements ...that is not hard.

However, if it was just him doing that, then what were his two sons, and the other people at the 'investment firm,' doing? Warming their seats? Twiddling their thumbs? Sitting by and wondering why they are receiving a salary for checking out FR/DU/porn on their computers instead of working?

There is no way Madoff could have done this alone. A few weeks back I listed what I would need to pull this off (I am a fund manager and one of the principals at a frontier market fund), and even if you really narrow the list, make Madoff a super-manipulator, and give him a casket of leprechaun-strength Pixie dust ....there is still no way he could have done this by himself without anyone in his company knowing there was something fishy going on.

44 posted on 01/15/2009 7:16:45 AM PST by spetznaz (Nuclear-tipped Ballistic Missiles: The Ultimate Phallic Symbol)
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To: Just mythoughts

Checks were written ~ that’s where the “conspiracy to commit mail fraud” comes from.


45 posted on 01/15/2009 7:18:09 AM PST by muawiyah
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To: marshmallow

Just wow. Un-freekin-believable. A five minute audit would have closed Madoff down.

This very same magnificent federal government “oversight” of Madoff will be now applied to the 1 trillion dollar stimulus run by the combined forces of the Chicago Machine and the Clinton Gang.


46 posted on 01/15/2009 7:18:17 AM PST by FormerACLUmember
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To: Mr. Jeeves
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. ;)

How did he take the money? Cash or checks? and to WHOM was this money given... I am doubting that the name Bernie Madoff was the person to whom the money was directly paid. Sounds to me the investors are going to have to come up with the evidence they actually invested with Madoff.

47 posted on 01/15/2009 7:19:19 AM PST by Just mythoughts (Isa.3:4 And I will give children to be their princes, and babes shall rule over them.)
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To: Just mythoughts
Why would people invest thinking there was 'trading' taking place?

Some people thought Maddoff was making his high returns by trading with inside information, e.g. taking advantage of future trades made by his brokerage firm. Of course, doing that is illegal and they had to know that, but it would give them incredible returns.

Personally, I believe he was shipping money to off shore accounts and some insiders, who are crying that they've been scammed, have their untaxed money safely offshore.

48 posted on 01/15/2009 7:21:18 AM PST by ladyjane
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To: spetznaz
I'm with you.

If there were no investments and no trades, that immediately raises the question of what his employees did all day. I hope I'm not being presumptuous in thinking that someone will soon be asking them that very question.

49 posted on 01/15/2009 7:21:34 AM PST by marshmallow ("A country which kills its own children has no future"- Mother Teresa of Calcutta)
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To: muawiyah

Madoff would still be going strong except that his “investors” were making redemptions to cover expenses due to their other investments tanking

Before this wave of redemptions Madoff was doing great because his “investors” rarely took money out. They plowed their dividends back in because it was such a great deal growing 12% each year ...on paper


50 posted on 01/15/2009 7:22:58 AM PST by dennisw (On the thirty first floor a gold plated door won't keep out the Lord's burning rage ---FBB)
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To: Liz
Use of old system ~ when you have a scam going that's in part based on using familiar software (CPM perhaps?), and a printer that you know how to load and keep working (so that you never have to let anyone else look at your "stuff") it's likely you will NEVER UPGRADE!

The impact printer kept him in business using up his pre-printed letter-head materials ~

Now, where was he getting his stock quotes? I suspect he didn't use a commercial service but was simply an early internet user and tapped Compuserve, AOL, or maybe Yahoo!

Now, as then, you can get free stock reports but they lag behind actual.

So, Bernie was secretive about all of this, and cheap ~ he wasn't wasting any money at all on the con!

51 posted on 01/15/2009 7:24:05 AM PST by muawiyah
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To: ladyjane
Personally, I believe he was shipping money to off shore accounts and some insiders, who are crying that they've been scammed, have their untaxed money safely offshore.

I think this scam came to light when that 'bailout' became law of the land.... New money to replace supposed old lost money.

52 posted on 01/15/2009 7:24:43 AM PST by Just mythoughts (Isa.3:4 And I will give children to be their princes, and babes shall rule over them.)
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To: marshmallow
If there were no investments and no trades, that immediately raises the question of what his employees did all day. I hope I'm not being presumptuous in thinking that someone will soon be asking them that very question.

I read one account where someone visited Bernie's operation and was taken to the trading floor which was stocked with computers. But no one was there....just computers. Madoff made some clever excuse
53 posted on 01/15/2009 7:25:54 AM PST by dennisw (On the thirty first floor a gold plated door won't keep out the Lord's burning rage ---FBB)
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To: Liz

lol


54 posted on 01/15/2009 7:27:46 AM PST by dennisw (On the thirty first floor a gold plated door won't keep out the Lord's burning rage ---FBB)
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To: marshmallow

All he needed was a server and some software.....software he developed. It would trade unobtrusively and not involve his other firm at all. It would find sellers or buyers for his clients. A sibling machine would generate statements for real or fake transactions.

Only he and his brother Peter need be involved


55 posted on 01/15/2009 7:32:00 AM PST by bert (K.E. N.P. +12 . The original point of America was not to be Europe)
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To: Liz
Printer ~ probably an old line printer ~ something like the one below ~ those things were real workhorses. Set em up and let em run for hours.

DEC (Digital) LG06 Line Printer

Digital (DEC) LG06 Line Printer 600 LPM Refurbished

 


56 posted on 01/15/2009 7:37:55 AM PST by muawiyah
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To: Just mythoughts

Except...it’s pretty embarassing to publicly acknowledge losing all the millions grandpa made in the cosmetics/garment/grocery business.

It’s not clear anybody is going to get reimbursed for ‘losses’ and it must be humiliating for those who were ‘in tight with Bernie’ and who now can’t afford their county club fees.


57 posted on 01/15/2009 7:37:59 AM PST by ladyjane
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To: spetznaz
Look, Bernie was able to keep this activity out of his other business. No doubt he looked at the clerical work involved as being good for arthritic finger joints ~ and there really wasn't all that much of it, particularly if he was using familiar software, and a familiar printer!

I've done more than he had to do with less and had plenty of time left over to run the office, deal with cases, and eat lunch.

58 posted on 01/15/2009 7:42:00 AM PST by muawiyah
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To: muawiyah

No trades. Then he was operating like a bank. For every $1 taken in he just kept 10 cents for reserves and spent the rest ie 90 cents. He probably broke a couple of banking laws ie lending too much to himself & not reporting non-performing loans.
Unfortunately the 90 cents was spent on “toxic” assets whose value has declined to zero.
Shouldn’t he be covered by TARP? Yes, if he contributed enough to the Democratic party.
If the Govt bails out all these rich Jewish Democratic voters and Charities that will give us middle and lower class taxpayers a “chance “ to contribute to the Democratic Party EVEN THOUGH WE AREN’T DEMOCRATS.


59 posted on 01/15/2009 7:42:45 AM PST by noah (noah)
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To: ladyjane
Except...it’s pretty embarassing to publicly acknowledge losing all the millions grandpa made in the cosmetics/garment/grocery business. It’s not clear anybody is going to get reimbursed for ‘losses’ and it must be humiliating for those who were ‘in tight with Bernie’ and who now can’t afford their county club fees.

It is not so embarrassing to these that got conned to think we the taxpayers are culpable for their losses....

60 posted on 01/15/2009 7:45:32 AM PST by Just mythoughts (Isa.3:4 And I will give children to be their princes, and babes shall rule over them.)
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