Bernie Madoff

Topics: Bernard Madoff, U.S. Securities and Exchange Commission, Ponzi scheme Pages: 2 (627 words) Published: November 26, 2013
The Bernie Madoff Ponzi Scheme
Ethical Situation:
In December of 2008, Bernie Madoff, was sentenced to 150 years in prison for swindling investors out of billions of dollars and creating one of the largest “Ponzi” schemes of all time(SEC). Bernie Madoff initially started out by establishing himself as a well-respected financial expert because he had been one of the founders of the NASDAQ stock exchange, and was chairman on the Board of Governors and the NASD. He created his own company called Bernie L. Madoff Investment Securities LLC which was established in 1960 as an investment advisory firm (SEC). This firm was considered the “trading powerhouse” and had been successful for up to 40 years (NY Times). Madoff became well known and was considered to be the “best investor on Wall Street” which is how he got the attention of wealthy investors (Lenzner). During the beginning of his scheming, he was running the firm as a legitimate business. Madoff later created a hedge fund called “Ascot Partners” which was a giant scam to swindle investors such as “hospitals, foundations, and religious groups” (Lenzner). He was able to carry on this scheme for over 20 years because of the way he had advertised and handled business with his investors. Madoff never advertised “getting rich quick”, but rather stayed consistent and would pay out stable amounts of money whether the stock was high or low (Lenzner). His investments would always show up as a return even though the same investments made by other firms would not. Madoff created fraudulent documents to support the investments he was claiming, and claimed to have a “black box model” which was a system he designed to tell when to buy or sell (Lenzner). Madoff’s schemes were finally discovered when competition from another firm began investigating how to compete with Madoff. The firm informed the SEC (Securities and Exchange Commission) that there was no way Madoff was getting the returns he was claiming without some sort...

References: "Bernard L. Madoff." News. The New York Times, 29 Sept. 2012. Web. 29 Sept. 2012. <http://topics.nytimes.com/top/reference/timestopics/people/m/bernard_l_madoff/index.html>.
Lenzner, Robert. "Bernie Madoff 's $50 Billion Ponzi Scheme." Forbes. Forbes Magazine, 12 Dec. 2008. Web. 29 Sept. 2012. <http://www.forbes.com/2008/12/12/madoff-ponzi-hedge-pf-ii-in_rl_1212croesus_inl.html>.
Securities and Exchange Commission. "Ponzi Schemes – Frequently Asked Questions." "Ponzi" Schemes. U.S. Securities and Exchange Commission, n.d. Web. 29 Sept. 2012. <http://www.sec.gov/answers/ponzi.htm>.
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