Bernard Madoff is one of the oldest brokers on Wall Street where he had worked for over fifty years. Madoff Investment Securities was one of the companies that participated in the creation of the Nasdaq. The company managed assets well into the billions of dollars. Almost half of its clients were hedge funds, banks, institutional investors, and private banking customers.
The Securities Exchange Commission opened an investigation as early as 1992, but the case was exonerated because no irregularity was discovered. However, some market players had their suspicions, as Madoff was apparently able to maintain the performance of their funds even when the rest of the market was sinking.
When the scandal was uncovered, the broker confessed to his family that their operations were in fact a financial pyramid scheme where pay returns were made to investors who put money in the funds of others. In other words, Madoff had been using the wealth of people to make one another wealth-ier. Or so he thought. It is a fraud based on the illusion that money is, indeed, gaining more. Madoff was behind the astounding feat in the suspension of disbelief.
On December 11, Madoff was arrested after admitting to the scam, along with his sons who both held high positions in his company. Madoff Investment Securities, founded in 1960, is being accused of accumulating $50 billion in losses because of fraudulent fund. The broker is on probation after paying a bail of $10 million. The charges against him carry a maximum penalty of 20 years in prison and a fine of $5 million.
The head of the biggest scam in history will remain under house arrest and monitored by an electronic bracelet as a US judge had ordered. The general prosecutor of the case has decided to defer the case for personal reasons. The main European markets are not impressed by the long list of people affected by Madoff’s fraud, except for the Paris Stock Exchange. They barely registered declines pertinent to the issue.
The story of Lawrence Bernard Madoff is as much a story of people who hope to be rich beyond their wildest dreams. Madoff is history’s biggest broker of greed.
