Madoff Ponzi Scheme
Just when it seemed like the economy couldn’t possibly get any worse, news broke last week that Bernard Madoff, a securities firm president, confessed that his portfolio management strategy amounted to little more than running a Ponzi scheme. The problem was, this guy used to be so respected by Wall Street types and his returns were so consistently good that there was some $50 billion in play before he confessed. A lot of that money was invested by the rich and famous, as well as by major financial institutions around the world.
Now I just read an article saying that at least one person who researched Madoff’s prospectus realized as far back as 1999 that it was mathematically impossible to earn the high returns that Madoff claimed. The man is Harry Markopolos, but obviously no one listened to him. Markopolos even filed an official complaint with the SEC in 2005, but again nothing was done.
I can’t believe that the SEC totally dropped the ball like this. Maybe they weren’t interested in investigating Madoff because he was formerly the chairman of NASDAQ and was therefore part of an elite circle. Or maybe they were just too damn concerned about enjoying their own fortunes to care about policing what was going on with others.
Either way, you just have to wonder how much money could have been preserved if someone had listened to Markopolos 10 years ago….