Anybody get screwed by Madoff?

have a read of this

 

http://online.wsj.com/documents/Madoff_SECdocs_20081217.pdf

have a read of this

 

http://online.wsj.com/documents/Madoff_SECdocs_20081217.pdf

 

WHOA!

 

Something I don't understand. This report was handed to the SEC on November 7th, 2005.

Did not one follow up on this? There has to have been a investigation of some sort?

This guy got royally screwed by Madoff....no pun intended.

 

http://news.yahoo.com/s/ap/20081223/ap_on_...nvestor_suicide

have a read of this

 

http://online.wsj.com/documents/Madoff_SECdocs_20081217.pdf

 

 

Holy shit!!

 

This guys cuts everything into pieces, prepares, serves and chews this whole thing into tiny pieces for SEC to digest it. One of the best reports I've ever seen - now if I was an investor I'd be pointing to this and asking SEC some questions.

 

 

It gets worse.

 

Much, much worse.

 

Clawbacks...investors may be required to repay profit payouts given to them from this scheme...for the last 6 years. I find this to be unreal.

It gets worse.

 

Much, much worse.

 

Clawbacks...investors may be required to repay profit payouts given to them from this scheme...for the last 6 years. I find this to be unreal.

 

 

All the while, every picture of the MF I've seen he's got a smirk or a smile! They should just leave him in a large stadium with his investors and let them decide what to do with him. On the other hand, there is talk of a $500k refund for individual investors that were swindled by Madoff, the only problem is that most of the money came through feeders! That means a group of people gave their money to one guy who then gave it to Madoff therefore even if thousands of people gave billions of dollars to the feeder, they're only covered up to $500k total!

 

On the other hand the people that have been crying about losing their money on the media are idiots as well. How could you have your lifes savings with ONE GUY!? One woman was moaning about losing all her money, yet on the other hand she also stated that she consistently got 10 to 12% returns on her money for over 28 years from Madoff! Somehow I have no sympathy for these types.

All the while, every picture of the MF I've seen he's got a smirk or a smile! They should just leave him in a large stadium with his investors and let them decide what to do with him. On the other hand, there is talk of a $500k refund for individual investors that were swindled by Madoff, the only problem is that most of the money came through feeders! That means a group of people gave their money to one guy who then gave it to Madoff therefore even if thousands of people gave billions of dollars to the feeder, they're only covered up to $500k total!

 

On the other hand the people that have been crying about losing their money on the media are idiots as well. How could you have your lifes savings with ONE GUY!? One woman was moaning about losing all her money, yet on the other hand she also stated that she consistently got 10 to 12% returns on her money for over 28 years from Madoff! Somehow I have no sympathy for these types.

 

That $500k in SIPC money may not materialize...because his scheme wasn't an actual fund...either way, good luck getting money out of SPIC anyway...they only have enough cash to cover 1/50th of what Madoff stole.

 

...to top it all off, the SEC has known about Madoff since at least 1999 and did nothing.

..either way, good luck getting money out of SPIC anyway...t

 

HEY! No racial slurs!

They should just leave him in a large stadium with his investors and let them decide what to do with him.

 

 

best idea yet

Anyone have any insight into why he did it? Power? Just to see if he could? Mental Illness?

 

I heard that he didn't live some kind of super extravagant lifestyle, so then why?

 

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.

You hit the nail right on the fcuking head. Its time to grab the pitchforks and torches and march on DC and wall street. When is it going to be enough? What exactly is it going to take before our citizenry realizes how fucked this country has become?!

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......

Easy Tiger.

 

I wasn't referring to Madoff when I made that statement, I was referring to the calamity that this country is in because of the lax oversight of the financial community by our government.

 

You have to understand who he was, his credentials etc, no one ever had a problem getting money back from him. I was told today that two years ago one of his big investors asked for all his money back since he had doubts about his investment scheme, once he got his money back his trust was renewed and he reinvested it all with him AGAIN!

 

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".

isnt a general rule that 10% max in any one place, and even thats a bit risky

 

Yep, I agree with you, we always tell our clients to NOT give us their net wealth to manage (and we diligently review their tax returns and bank accounts before trading anything). At the most 10-15% of what they have. I never want to be "on the hook" if we have a bad run. The first moment you get sued, is when someone loses everything they had, and they lost it ALL with YOU...

WHOA!

 

Something I don't understand. This report was handed to the SEC on November 7th, 2005.

Did not one follow up on this? There has to have been a investigation of some sort?

 

The problem is: This is NOT from a disgruntled investor (a person or institution that has lost a considerable amount of money holds alot of weight in a complaint). It is from an independent entity in the financial investment industry. That of which, it could be considered a ploy by a competing fund or an affiliate firm of a competitor to undermine or slander the success of an "honest" fund and well run business. The SEC probably gets lots of these claims (and most from guys trying to "blow the whistle" on someone falsely, just so they can land the New York Public Authority Employee Pension Funds, to trade before the next guy). Most are taken with a grain of salt. Obviously, some "look-see" happened, but if everything "checks-out" what else is the SEC supposed to do????

 

Let's just chalk this up to a grand theft of monumental proportions, that was masterfully executed and even the most expert investigators found it a challenge to discover. It is what it is.........

I wasn't referring to Madoff when I made that statement, I was referring to the calamity that this country is in because of the lax oversight of the financial community by our government.

 

Yeah, I understand. But don't be so quick to blame the SEC or the government. Up until this point, they were pretty "kick-ass" with the oversight. A master thief is a master thief, even the best get duped once in a while. He did have an impeccable reputation, (which goes a long way in the Wall Street Circles).

 

Don't encourage the SEC to tighten up anymore then they already are. And for sure we don't need more government rule, they always find a way to screw up business by bureaucratic meddling.

YOU, the investor, don't want to begin to lose YOUR opportunities to take advantage of the alternative investment strategies that exist, to grow your wealth, while other markets go down the drain.....

 

What we need to do is strongly influence the education of investing to all. Like you said earlier, I too find it hard to have sympathy for someone who puts their entire Net-Wealth with ONE person. Just asking for trouble. Just like the Enron people (no one told them to ONLY hold Enron stock in their Million Dollar 401K), EXPECT THE UNEXPECTED, and protect yourself from it.

The problem is: This is NOT from a disgruntled investor (a person or institution that has lost a considerable amount of money holds alot of weight in a complaint). It is from an independent entity in the financial investment industry. That of which, it could be considered a ploy by a competing fund or an affiliate firm of a competitor to undermine or slander the success of an "honest" fund and well run business. The SEC probably gets lots of these claims (and most from guys trying to "blow the whistle" on someone falsely, just so they can land the New York Public Authority Employee Pension Funds, to trade before the next guy). Most are taken with a grain of salt. Obviously, some "look-see" happened, but if everything "checks-out" what else is the SEC supposed to do????

 

Let's just chalk this up to a grand theft of monumental proportions, that was masterfully executed and even the most expert investigators found it a challenge to discover. It is what it is.........

 

I think you are being naive.....the fact that more than a few anonymous industry pros started snitching on him years ago indicates that his scam was an open secret on the Street. You can't hide 50 billion from Wall St, your competitors, or the people you trade with. Only a few hedge funds operate at that level, and they all keep tabs on each other.

 

The SEC either fucked up or more likely, were told to lay off of him.

The big question is, was the current level of regulation adequate, but just badly written, incompetant, etc...in which case the solution is not a heavy-handed dose of more regulation, which will screw things up farther, but rather intelligent RE-regulation, or are there certain areas of the financial industry that are too un-regulated and need more regulation?

 

Financial deregulation back in the 1980s gave HUGE benefits to the economy and the financial markets long term. so overall, deregulation has been good, but this doesn't mean we may not need to increase regulations in some areas moreso.

 

Also, some areas may be too regulated, and need less regulation.

 

Government needs to take a HARD look at the whole thing and make intelligent decisions. Of course that is like trying to teach a monkey to program in C++.

 

The geniuses in Washington seem to work in the mindset that if they decide more regulation is needed, than they smother the financial markets with it, and screw things up. And not only that, but then the regulations do not do their intended purpose.

 

Sarbannes-Oxley, for example, is a piece of heavy-handed regulation that is hurting our economy. Europe is already advertising itself as a "Sarbannes-Oxley-free zone."

I think you are being naive.....the fact that more than a few anonymous industry pros started snitching on him years ago indicates that his scam was an open secret on the Street. You can't hide 50 billion from Wall St, your competitors, or the people you trade with. Only a few hedge funds operate at that level, and they all keep tabs on each other.

 

The SEC either fucked up or more likely, were told to lay off of him.

 

Naive? Ah, OKay... Might be the other way around (with due respect). I'll be more descriptive now.

 

DISCLAIMER : I AM NOT DEFENDING THE GUY I AM MERELY TRYING TO SHED SOME LIGHT ON HOW SOMETHING LIKE THIS CAN HAPPEN ON THE STREET. TAKE IT FOR WHAT ITS WORTH.

 

Anonymous industry pros is exactly the reason to halfway investigate the claims. There is tremendous competition, that of which you could not imagine. Some guys will and have, dropped a "false-dime" on someone just to have books opened and see how they do what they do (the SEC keeps this FACT in consideration). Trust me, the next guy does NOT know what the other does NOR how he manages his money. Heddgies work diligently to keep it that way, its the edge you need once multi-bill funds start bumping into the same prospects. Couldnt have been "snitching" as you put it, none of the "pros" worked there... You CAN hide $50Billion on WallStreet, hedge funds are private investment of private money, no advertising, no marketing, closed door business. By the way there's more $20B-$120B funds than you think, you say a few, try more than 30 (including Private Eq. that also dabbles in different type of Hfunds)...

 

"Open secret": More like silent rumor about one of the "cleanest" managers on the street (at the time, choose to believe it or not).

 

"The people you trade with": Well if you own your own broker dealer and/or execution platform, all of your record keeping is in house. And it's easy to keep employees mouths shut (higher bonuses, stricter non-disclosure rules etc.).

 

"They all keep tabs on each other": not really, dont make assumptions based on the dollar value. The proposed "whistleblowers" were advisory and review groups and NOT the actual hedge guys (most could care less).

 

The SEC would never "lay off" of anyone that can be proven to be doing wrong, the problem is no one could reasonably prove wrongdoing. Anything else was here-say, and "complex, investment strategy". Seriously, you'd be surprised how easily one can explain off an anomaly to their trading techniques. This is an industry that to this day, consistently continues to develop with new styles and programs, software, algorithms etc. that are more complex and detailed than ever before. Remember, Hedge Funds don't have to get their strategies approved, nor does it need to be understood. Guys are coming up with something new to trade and how to trade it differently everyday (there are guys that trade contracts on "the weather" for example), trust me. This is the Private Asset Investment world don't confuse it with Mutual Funds. EX: One of the ways Private Equity came about was when some guys decided they wanted to take equity positions in companies instead of buying the company stock (more control on your investment when you run the corporation). The biz constantly changes everyday. You dont believe me, that's fine.

 

The point is this: If after investigating something, you come to the conclusion that something doesn't look right, BUT you cant quite call out what it is (and you don't quite understand everything you're looking at anyways, which was mentioned), AND ,(here's the big one), no one has YET claimed to have lost money, AND the guy has an impeccable rep, then why would you look further??? With what can you charge him?

 

Could you really, audit a multi-billion dollar firm, tell them to stop trading $30Billion (at the time) of very important people's and institutions' money, liquidate potential positions (forcing clients to realize taxes etc.) and pull out the money from the accounts and let's see if it's all there? Do you think any entity could get away with that on here-say without a lawsuit for harassment?

THIS is the dilemma the SEC is faced with over a couple reports from OUTSIDE non-investor sources. SURE, competition would LOVE to see a monster fund get held up in red-tape and get new clients from it.

 

On a side note, a person with 10Mil net worth that loses 2Mil with the guy would be able to sleep comfortably, lick his wounds and move on. It's the unwise that went "all-in" that are really gonna feel this for a long time.

Naive? Ah, OKay... Might be the other way around (with due respect). I'll be more descriptive now.

 

DISCLAIMER : I AM NOT DEFENDING THE GUY I AM MERELY TRYING TO SHED SOME LIGHT ON HOW SOMETHING LIKE THIS CAN HAPPEN ON THE STREET. TAKE IT FOR WHAT ITS WORTH.

 

Anonymous industry pros is exactly the reason to halfway investigate the claims. There is tremendous competition, that of which you could not imagine. Some guys will and have, dropped a "false-dime" on someone just to have books opened and see how they do what they do (the SEC keeps this FACT in consideration). Trust me, the next guy does NOT know what the other does NOR how he manages his money. Heddgies work diligently to keep it that way, its the edge you need once multi-bill funds start bumping into the same prospects. Couldnt have been "snitching" as you put it, none of the "pros" worked there... You CAN hide $50Billion on WallStreet, hedge funds are private investment of private money, no advertising, no marketing, closed door business. By the way there's more $20B-$120B funds than you think, you say a few, try more than 30 (including Private Eq. that also dabbles in different type of Hfunds)...

 

"Open secret": More like silent rumor about one of the "cleanest" managers on the street (at the time, choose to believe it or not).

 

"The people you trade with": Well if you own your own broker dealer and/or execution platform, all of your record keeping is in house. And it's easy to keep employees mouths shut (higher bonuses, stricter non-disclosure rules etc.).

 

"They all keep tabs on each other": not really, dont make assumptions based on the dollar value. The proposed "whistleblowers" were advisory and review groups and NOT the actual hedge guys (most could care less).

 

The SEC would never "lay off" of anyone that can be proven to be doing wrong, the problem is no one could reasonably prove wrongdoing. Anything else was here-say, and "complex, investment strategy". Seriously, you'd be surprised how easily one can explain off an anomaly to their trading techniques. This is an industry that to this day, consistently continues to develop with new styles and programs, software, algorithms etc. that are more complex and detailed than ever before. Remember, Hedge Funds don't have to get their strategies approved, nor does it need to be understood. Guys are coming up with something new to trade and how to trade it differently everyday (there are guys that trade contracts on "the weather" for example), trust me. This is the Private Asset Investment world don't confuse it with Mutual Funds. EX: One of the ways Private Equity came about was when some guys decided they wanted to take equity positions in companies instead of buying the company stock (more control on your investment when you run the corporation). The biz constantly changes everyday. You dont believe me, that's fine.

 

The point is this: If after investigating something, you come to the conclusion that something doesn't look right, BUT you cant quite call out what it is (and you don't quite understand everything you're looking at anyways, which was mentioned), AND ,(here's the big one), no one has YET claimed to have lost money, AND the guy has an impeccable rep, then why would you look further??? With what can you charge him?

 

Could you really, audit a multi-billion dollar firm, tell them to stop trading $30Billion (at the time) of very important people's and institutions' money, liquidate potential positions (forcing clients to realize taxes etc.) and pull out the money from the accounts and let's see if it's all there? Do you think any entity could get away with that on here-say without a lawsuit for harassment?

THIS is the dilemma the SEC is faced with over a couple reports from OUTSIDE non-investor sources. SURE, competition would LOVE to see a monster fund get held up in red-tape and get new clients from it.

 

Are you calling this report a "false dime"? With 24 red flags, I suggest you check out red flag number 20, the "open secret" flag, or the numerous other flags that proved Maddof's stated trading strategy profits were mathematically impossible, not to mention the biggest red flag of all: 15 years of strait profits with only one down month.

 

All the big players on the street were on to his game, most avoided him, that's why he started scamming in Europe. You are correct about the SEC not having the balls to investigate, but it was due to Maddof being politically connected, not because the competition was out to destroy him.... thats the rub, the guy was a bad apple, and MANY knew about it, but did nothing.

One of the biggest red flags was that his accountant/ auditor was a 3 man job: a secretary, an accountant, and the owner who lived in Fl. Not to mention that the firm has publicly declared that they DO NOT DO AUDITS.

 

I don't think it is 'political' connections. The SEC is overrated and well, can you imagine the IRS doing an audit and only relying on the information you give them, without the need for any verification? The fact is, anyone would have been streered clear of them if they did due diligence. 3 Hedge Fund consulting firms are and were on the record to not go with Madoff. Noels fund (7.5bill feeder fund all to Madoff) had on there website that they investigated, for 8-12 months, anyone they invested with. lol Sorry, but I hope that comes back to bite him/ his fund.

 

 

 

I heard a funny quote the other day, When asked where the idea for the fraud came from Madoff replied "from the way thr Social Security System works"

 

Russell

I heard a funny quote the other day, When asked where the idea for the fraud came from Madoff replied "from the way thr Social Security System works"

 

Russell

 

 

Oh really?

sorry day late and $ short

 

 

Russell

Are you calling this report a "false dime"? With 24 red flags, I suggest you check out red flag number 20, the "open secret" flag, or the numerous other flags that proved Maddof's stated trading strategy profits were mathematically impossible, not to mention the biggest red flag of all: 15 years of strait profits with only one down month.

 

All the big players on the street were on to his game, most avoided him, that's why he started scamming in Europe. You are correct about the SEC not having the balls to investigate, but it was due to Maddof being politically connected, not because the competition was out to destroy him.... thats the rub, the guy was a bad apple, and MANY knew about it, but did nothing.

 

TRUE THAT, absolutely!!!

Vroom, it's funny how we both end up at the same conclusion after all this... Absolutely not a "false dime" in his case, all reasonable red flags, TO AN INVESTOR, but not necessarily to an authoritative body without complaints or proof (just saying how it can be taken lightly in light of all the other circumstances involved). The SEC, CFTC, and NFA usually ONLY come after a guy, when there has been investor complaints submitted to them.

 

It is a sad thing that happened to all those involved, and he should be put away for a long time. He was a master thief that took the trust of many and pissed it all away. How anyone can eventually grow a business to $50 Billion and NOT just run it honestly is beyond me, but whatever, he never was a good trader to begin with I guess.