Madoff's fund may not have made a single trade

[Ichingcarpenter]

Source: Reuters

BOSTON (Reuters) – 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.

Read more: http://news.yahoo.com/s/nm/20090116/ts_nm/us_madoff_trades

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And nobody check it out

[yardwork]

1. Shouldn't this lack of trading have been obvious years ago?

Didn't anybody notice that this supposedly brilliant trader wasn't trading? This may be a stupid question.

[marketcrazy1]

2. somebody knew

there is NO WAY he could have pulled this off on his own. regulators HAD to know, someone somewhere is complicit.......

[aquart]

3. Wasn't one accountant constantly writing whistleblower letters to the SEC?

[pjt7]

8. yes, a Greek guy formally registered

a complaint with the SEC, multiple times & he even submitted his own lenghty research.

[Ichingcarpenter]

4. I find this as an indictment on the whole system

The IRS and the Regulators should have known.

[pjt7]

7. Exactly

This means somebody inside the SEC was in on the game.

Just an amazing craft of high-scale robbery.

[Liberal_in_LA]

15. Yep, no way did Maddoff sit a computer generating complex financial statements.

It's amazing really... they (Maddoff and accomplices had to keep running balances for all their clients for decades.

[JerseygirlCT]

17. That's what I'm thinking, too. nt

[mcg]

10. I think he must have had some accomplices, but it shows ...

that SEC oversight is inadequate in general. This should not have been possible.

I worked at WorldCom and bought stock at $2 when it was going down. I figured it couldn't get worse. I was wrong. I was astounded when the news broke of the scandal. Previously I had been conned by penny stock brokers. I learned that crooked brokers partner with corrupt stock clearing houses.

Wall Street is chock full of criminals, very powerful criminals who want weak oversight.

[Stephanie]

5. So was it like The Sting?

He waits to see which stocks went up, then pretends those are the ones he purchased?

[Baby Snooks]

6. And then you have the hedge funds that invested with him...

The whole thing is a mystery. It really is inconceivable that he merely deposited the money and then disbursed it as interest/dividend income. The math doesn't add up. At some point during the almost 50 years he was in business, the money wouldn't have been there. That's what happens in Ponzi schemes. It is inconceivable that someone was able to pull a Ponzi scheme for almost 50 years. Still something was not right and regulators should have caught it.

This was reported early on. He was claiming equity in those monthly statements that didn't exist. Apparently he had a computer program that just "divied" up the supposed equities according to how much the individual had invested. Everyone had the same equities. Just different number of shares. According to their investment.

And why would hedge funds be investing with him? You would think he would be investing with them for the potential returns.

And of course you have the matter of money laundering and tax evasion. Some of the investors apparently not sure what they should claim. Not knowing what was laundered and what was invested even though it appears none of it was invested.

We will never know. Just as we will never really know the truth about Enron. Too many "important people" involved.

[okiru109]

9. lol - excellent work SEC, he must have been hard to track by your systems being a ghost

talk about slipping under the radar :evilgrin:

i guess that will be the excuse, eh?

[Gin]

11. imagine the time, and thought energy it took to keep this scam running....

I just don't see how it could have lasted the whole time he was in business...I read at some other site that he actually started his scheme in 2005. I also read his wife is being investigated for this also.

[okiru109]

12. a lifestyle

which is probably a LOT easier then actually making real and profitable investments consistently.

[jmowreader]

13. Do hedge funds often invest in mutual funds?

It sounds really strange to me that a guy who's running a very large hedge fund operation would buy into mutual funds.

[Ichingcarpenter]

14. His mother was warned by the SEC to get out of the Business in the 60s

Madoff's mother tangled with the feds

The late Sylvia Madoff was registered as a broker-dealer in the 1960s but left the business after being cited for failing to file reports.

NEW YORK (Fortune) -- Accused Ponzi schemer Bernard Madoff was not the first person in his close-knit family to run afoul of federal authorities. A broker-dealer firm registered in the name of Madoff's mother, Sylvia, was effectively forced to close by the U.S. Securities & Exchange Commission more than 40 years ago.

In August 1963, the SEC announced it was "instituting proceedings...to determine whether" 48 broker-dealers, including "Sylvia R. Madoff Gibraltar Securities," had "failed to file reports of their financial condition...and if so, whether their registrations should be revoked."

An SEC litigation release a month later announced hearings in the case of Madoff and many of the other firms in question.

Then, in January 1964, the SEC dismissed administrative proceedings against a number of the firms, including Madoff's, in what appeared to be a deal: No penalties if you promise to stay out of business.

http://money.cnn.com/2009/01/16/magazines/fortune/madof...

[JerseygirlCT]

16. Your last sentence... exactly. Is no one supposed to be watching this

stuff?

No regulations?

[dysfunctional press]

18. if he had actually made trades, he might have lost some of the money...

everyone knows that the stock market is a gamble-
why risk it? :shrug: