Madoff Madness

[3113]

This story just keeps getting more outrageous....

Bernie Madoff's investment fund may never have executed a single trade, industry officials say, suggesting detailed statements mailed to investors each month may have been an elaborate mirage in a $50 billion fraud. An industry-run regulator for brokerage firms said on Thursday there was no record of Madoff's investment fund placing trades through his brokerage operation. That means Madoff either placed trades through other brokerage firms, a move industry officials consider unlikely, or he was not executing trades at all. "Our exams showed no evidence of trading on behalf of the investment advisor, no evidence of any customer statements being generated by the broker-dealer," said Herb Perone, spokesman for the Financial Industry Regulatory Authority.

...Each month, Madoff sent out elaborate statements of trades conducted by his broker-dealer. Last November, for example, he issued a statement to one investor showing he bought shares of Merck & Co Inc, Microsoft Corp, Exxon Mobil Corp and Amgen Inc among others. It also showed transactions in Fidelity Investments' Spartan Fund. But Fidelity, the world's biggest mutual fund company, has no record of Madoff or his company making any investments in its funds.

"We are not aware of any investments by Madoff in our funds on behalf of his clients," Fidelity spokeswoman Anne Crowley said in an e-mail to Reuters.
Neither Madoff nor his firm was a client of Fidelity's Institutional Wealth Services business, their clearing firm National Financial or a financial intermediary client of its institutional services arm, she said. "Consequently, his firm did not work with our intermediary businesses through which firms invest their clients' money in Fidelity funds," she added.

There also appear to be discrepancies between monthly statements sent to investors and the actual prices at which the stocks traded on Wall Street.
For example, his November statement showed he bought software maker Apple Inc's securities at $100.78 each on November 12, about a month before his arrest.
But Apple's stock on that day never traded above $93.24. The statement also showed he bought chip maker Intel Corp at $14.51 on November 12, but Intel's highest price on that day was $13.97. "You could print up any statements you want on the computer and send it out to a client and the chances are the client wouldn't know, because they are getting a statement," said Neil Hackman, president and chief executive of Oak Financial Group, a Stamford, Connecticut-based investment advisory firm.

About 10 years ago, Harry Markopolos, then chief investment officer at Rampart Investment Management Co in Boston, asked risk management consultant Daniel diBartolomeo to run Madoff's numbers after Markopolos tried to emulate Madoff's strategy. DiBartolomeo ran regression analyses and various calculations, but failed to reconcile them. For a decade, Markopolos raised the issue with the U.S. Securities and Exchange Commission, which has come under fire in Congress in recent weeks for failing to act on Markopolos's warnings.

Full article here.

 

[voluptuary_manque]

But he was so charming! How could that dear, sweet, old soul be a crook?

 

[trysail]

I am continually amazed at just how gullible and stupid people are. I thought this astonishment would decline as I got older, but every time I see the result of yet another example of groupthink, herd behavior and trend-following I find myself shaking my head in utter disbelief. Why are people so stupid? Why do they find it nearly impossible to think for themselves? Why did so many sheepishly breach basic investment principles?

One of my career failings included putting far too much faith in people's ability and willingness to exert the effort required to discriminate and choose between snake oil and the genuine article. A truly astonishing preponderance always falls into the same old traps. It never ceases to amaze me.

I don't even want to think about how much money I could have made if I'd been crooked. *Sigh* "Virtue is its own reward."

Pandering to the mob always comes at the expense of truth.

 

[voluptuary_manque]

I am continually amazed at just how gullible and stupid people are. I thought this astonishment would decline as I got older, but every time I see the result of yet another example of groupthink, herd behavior and trend-following I find myself shaking my head in utter disbelief. Why are people so stupid? Why do they find it nearly impossible to think for themselves? Why did so many sheepishly breach basic investment principles?

One of my career failings included putting far too much faith in people's ability and willingness to exert the effort required to discriminate and choose between snake oil and the genuine article. A truly astonishing preponderance always falls into the same old traps. It never ceases to amaze me.

I don't even want to think about how much money I could have made if I'd been crooked. *Sigh* "Virtue is its own reward."

Pandering to the mob always comes at the expense of truth.

Worse yet, virtue is often its only reward.

 

[trysail]

Worse yet, virtue is often its only reward.

Even as a firm agnostic, there are times I fervently pray that my doubts of the existence of a deity, an afterlife and eternal judgment are proven wrong. I'd like to be around to witness the pronouncements of an angry god upon many of my "professional" peers.

Regrettably, your statement is nevertheless likely correct. It's enough to try the patience of Job and amuse the ghosts of Kafka and Yossarian.

 

[rgraham666]

Two rules for running a con.

1. The mark(s) must have more money than they need.

2. The mark(s) must want more.

Every thing's easy after that.

As far as virtue goes, too many people don't give a shit about virtue. And the higher you go on the ladder the larger percentage thinks that way. It's power that counts.

 

[xssve]

Symptomatic of the psychological condition of the country - people won't hesitate to invent motives for those with different political opinions, but give "their own" a blanket pass - nobody ever did due diligence on this guy before giving him their money, it would have been gauche.

 

[JAMESBJOHNSON]

TRYSAIL

I just finished reading biographies of Capone and Nitti.

What I learned is: If you give the market what it wants, at a price it likes, the government will spare no expense nor pain to come after you. Politicians will take your bribes, use your wares, and unleash the dogs on you...all at the same time. But they cant seem to catch Wall Street thieves.

 

[DesertPirate]

The funny justice part?
One organization seeking financial help from Washington is Planned Parenthood, seems they had a bunch invested with Madoff

 

[BOSTONFICTIONWRITER]

I wonder if he'll make a deal in return of most of the money.

You can't cheat an honest man. It's easier to cheat one that is greedy.

I feel bad for those who lost everything, including their house. Yet, I learned long ago never to put all my eggs in one basket.

I'm surprised someone hasn't put a bullet in him, as I'm sure there are those who stand to make and keep a lot of their ill gained monies with the death of him.