Madoff fund may have made no trades
By MARCY GORDON – 17 hours ago
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WASHINGTON (AP) — The investment fund run by disgraced money manager Bernard Madoff may not have made even a single trade, a new twist in the scandal around an alleged $50 billion fraud that has engulfed thousands of investors and financial institutions worldwide.
The securities and brokerage industry's self-policing organization, the Financial Industry Regulatory Authority, confirmed there was no evidence of Madoff's secretive investment fund executing trades through his brokerage operation. And Fidelity Investments, which had a money-market fund listed among the many trades included in statements Madoff's fund sent to customers, says Madoff was not a client.
Madoff, long a prominent Wall Street figure and former chairman of the Nasdaq Stock Market, has become a global villain since he confessed last month to stealing $50 billion in what may be the largest Ponzi scheme in history.
The scandal also has cast a harsh light on regulators. The Securities and Exchange Commission failed to detect the scheme despite credible allegations against Madoff's operations being brought to the agency's staff over the course of a decade. The SEC inspected his brokerage operation and the investment firm. SEC spokesman John Nester declined to comment Friday.
The industry's self-policing organization, known as FINRA, made periodic examinations of Madoff's brokerage operation, which functioned as a wholesale platform for trading by big securities firms and investment banks.
"We saw no indication of any trading on behalf of" Madoff's investment firm, FINRA spokesman Herb Perone said Friday. "And we saw no evidence of customer account statements being generated" by the brokerage for the investment arm.
Adam Banker, a spokesman at Fidelity's Boston headquarters, said that neither Madoff nor his firm were clients of any Fidelity divisions. "We're not aware of any investments by Madoff in our funds on behalf of his clients," Banker said.
The apparent lack of trades by Madoff's firm was reported Thursday by The Boston Globe.
Mary Schapiro, the chief executive of FINRA, is President-elect Barack Obama's nominee to become the new chairman of the SEC. She said in her Senate confirmation hearing Thursday that because the alleged fraud was carried out through Madoff's investment business, and FINRA was empowered to inspect only the brokerage operation, it wasn't possible for the organization to discover the violations.
Madoff allegedly orchestrated a Ponzi scheme, in which people are persuaded to invest in a fraudulent operation. The early investors are paid their returns out of money put in by later investors. Federal prosecutors are seeking to jail him. |
