Bernie Madoff’s Ponzy Scheme

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  • Topic: Ponzi scheme, Investment, Bernard Madoff
  • Pages : 6 (1476 words )
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  • Published : October 18, 2012
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Research Paper

Bernie Madoff’s Ponzy Scheme

Contemporary Business Ethics
Contemporary Business Ethics

Contemporary Business Ethics

June 16, 2012

Table of Contents

Ethical issues involved……………………………………………………………..3 Relevant facts……………………………………………………………………….4 Fairness to all concerned……………………………………………………………5 Impact on society……………………………………………………………………5 Impact to related industries………………………………………………………….6 Impact to the stakeholders…………………………………………………………...7 Impact to the employees……………………………………………………………..8 Industry image………………………………………………………………………..8 Federal guidelines…………………………………………………………………….9 Personal conscious if involved in a similar situation………………………………..10 References……………………………………………………………………………11

Ethical issues involved

Bernie Madoff superficially demonstrated contradicting immoral character and virtuous ethical values, causing widespread loss of financial assets to credulous victims. As such he gained such a good reputation in the industry that many of his investors had their life savings invested with him. When clients requested to cash in their investments, he would simply pay existing clients with new clients' money. As a result, some of Madoff's investors were divested of their entire life savings. Bernie Madoff failed to obey the laws that are considered the minimum code of conduct to which society has agreed to respect. “Breaking laws means breaking the social contract to which he agreed in becoming a member of society”. In turn this means that society has the right to punish him by revoking the rights granted by it.

If we were to apply utilitarianism theory Madoff did not promote a behavior that maximizes the best for the stakeholders. His need for self-interest superseded the best interests of all other members of society.Indeed, many could argue that he demonstrated classic sociopathic tendencies.

Relevant facts

• He promised high returns to the clients in spite of economic recession. • Fund strategies were to buy securities from large and credible corporations with low risk with the promise of high returns and secure principle. • He never invested the money. It was deposited instead into his business account at Chase Manhattan bank. • Bernard Madoff sat on the board of directors of the industry security association. • In December 2008, Madoff’s sons informed the federal authorities after he confessed to them that the investment was a Ponzi scheme. • In March 2009, he pleaded guilty to 11 felonies.

• In June 11, 2009 Madoff was sentenced to maximum sentence of 150 years in prison. • SEC was scrutinized for not investigating, despite complaints from Markopoulos and others. • Size of loss to investors between $12 and $50 billion

Fairness to all concerned

Bernie Madoff is the world record holder for a Ponzi scheme. He stole over $50 billion claiming he had invested clients’ money. Many investors lost their entire life savings and it ruined their lives. Even if he were to be sentenced with capital punishment his death wouldn't amply punishment for the damage he has caused for the stakeholders. Furthermore, the nonprofit organizations were compelled to end their operations. Hence, they are no longer able to contribute to the society. Life in prison or even capital punishment sometimes does not meet just requirements. In extreme cases such as this, where societal damage occurs and reoccurs on multiple levels, affecting both individuals and corporations, because of the acts of one immoral person, the justice system should deliver punishment in the swiftest and most thorough manner possible.

Impact on society
Besides many individuals and organizations being affected by Madoff’s Ponzi scheme, there are other affected groups which are not directly involved either by...
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