Did Madoff Trade Any Stocks? Evidence Is Lacking
January 15, 2009, 2:44 pm
dealbook.blogs.nytimes.com
The disgraced financier Bernard L. Madoff, accused of securities fraud, appears to have been running a pure Ponzi scheme because industry regulators have been unable to find evidence of any actual stock trades.
A Wall Street self-regulatory group said there was no record of Mr. Madoff’s investment funds placing trades through his brokerage operation. That appears to leave 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,” Herb Perone, spokesman for the regulatory group, the Financial Industry Regulatory Authority, told The Boston Globe.
The authority, known as Finra, and its predecessor, the National Association of Securities Dealers, has been examining the records of Mr. 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, Mr. Perone said.
The finding is one of many facts investigators are poring over as they seek to piece together Mr. Madoff’s reputed $50 billion Ponzi scheme, an unidentified lawyer involved in the case told The Globe. The newspaper said evidence that Mr. Madoff did not process any of his investment funds’ trades through his own brokerage firm would be a key indicator that he was not making the trades he claimed.
If Mr. Madoff was making no real trades, the complicated statements he sent out to customers were apparently fiction — and in fact may have been part of his cover-up.
Separately, Sonja Kohn, chairwoman of Bank Medici, the Austrian private bank that invested $3.2 billion with Mr. Madoff, asserted that he was not a personal friend and did not confide in her.
“Having fallen victim to a company supervised by a U.S. regulator, as did many of the world’s most illustrious financial institutions, does not ease the pain,” Ms. Kohn said in an e-mailed statement received by Bloomberg News.
“Reading that some voices believe that I should have known better makes the pain even more unbearable,” she said in her first public comment since Mr. Madoff was arrested last month.
Ms. Kohn said Mr. Madoff was “trusted by the best and smartest” and likened his reputed Ponzi scheme to a tsunami or earthquake that strikes “unpredictably and devastatingly.”
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5 comments so far...
1.
January 15th,
2009
4:01 pm
It’s interesting that her analogy here is so apt. These two different types of natural disasters are entirely avoidable with proper due diligence: 1) don’t live on the coast, and 2) don’t live on fault lines.
— Posted by John William
2.
January 15th,
2009
4:59 pm
If that’s true, then what were all of the analysts, traders, back office people doing all day?
How could no one else realize the whole thing wasn’t real?
— Posted by Michael
3.
January 15th,
2009
6:55 pm
This would have to be the biggest embarrassment of all for the SEC. Bad books or not, to not own a single security because you never bought a single share would have to come up in even the shortest of detailed review of the books. With money going in without the anything tangible to show for it is the perfect example of a Ponzi scheme.
— Posted by Dave
4.
January 15th,
2009
7:39 pm
s.e.c. = sleepy eyes closed
— Posted by chris hauser
5.
January 15th,
2009
7:40 pm
or as casey stengel said “can’t anybody play this here game?”
or something like that
— Posted by chris hauser |
