Swil

Yep exactly! Like the saying goes in Boiler Room (watch it, good movie). "Show a client 3% return, and he'll trust you to babysit his kids".

Easy Tiger. Well............ I can honestly understand how it got by them... The SEC ONLY gets wind of something IF there are enough complaints submitted to them by disgruntled investors that had been duped by a "known" scheme. Remember like I said above, most thought that their money was fine. ONLY until Madoff confessed "out-of-the-blue" that this has happened, was everyone shocked. The SEC is already stringent enough (regulation, licensing, disclosure, oversight etc.), if he crossed all his "Ts" during the 20+ years, how are they gonna know? Ultimately, it ALWAYS comes down to the honesty of the individual. It was a MAJOR LIE, and for that he should never be forgiven. Jeez Bernie, just take the losses and continue to build business, you lose clients and you get more, move on, I just don't understand. I WISH I could get $50 Billion under management!!!! Do you guys realize with 4% return in any given year his fees would be enough to retire on (20% fees of positive return= $400,000,000 by the way), as an HONEST business man......

Yeah, it's not like he took the cash and was living like P-Diddy on other people's money. He actually started out as a "good" honest Hedge Fund... I think it actually came from him not wanting to claim any investment losses to the original investors when they started, (waaaay back like 15 - 20 years ago). In other words: how else are you gonna build an investment business if you come out the gate losing money? *side bar *The problem with "hedge funds" is they get to print their own statements, so you can make up whatever return you want to and send it to the clients (third party brokerage firms that execute your trades and do your accounting for you, wont let that happen). *side bar ended* So he got in the habit of showing them positive returns and crediting the new client incoming money to the early investors' accounts as long as new money kept coming into the fund, and he figured he'd straighten it out later (meaning figuring out how to trade)... The problem came when he ended up being a shitty trader and his philosophy didn't work with the volatility of the markets and he continued to take losses over many years (without being a MAN and letting his clients realize the losses), he continued to fabricate consistent returns and garnered more and more NEW money from people impressed with his "so-called" investment acumen.. It finally got to the point where he had to admit that the $50 Billion dollars that had come into his funds over the years, actually no longer existed since the influx of money dried-up due to redemptions and clients requesting their money back to take care of personal expense issues (like many of us fund managers have had to deal with this last quarter). BUT, people expecting $5M, $20M or $50million bucks to come back to them actually had nothing in their account because other people had already received their money to cover the "scherade" of investment gains... It got to be too large of an issue, and he had to "fess-up" and say "oh my, this has been nothing but a large Ponzi that I've been running for years"...(Probably through the advisement of his attorney in advance, since it's better than the SEC finding out and accusing you first).......... THAT's the way I understand it happened.