Wall Street Shocked At Madoff's Ponzi Scheme of "Epic Proportions"
Yesterday afternoon, Wall Street was shocked to learn that well-respected trader Bernard Madoff was arrested for running a "giant Ponzi scheme" that he perpetrated on advisory clients of his firm. The SEC called it a "stunning fraud that appears to be of epic proportions."
In its complaint, the SEC alleges that yesterday Madoff told two high level employees that his business was a fraud. He told these employees that he was "finished," that he had "absolutely nothing," that "it's all just one big lie," and that it was "basically, a giant Ponzi scheme." Madoff had for years been paying returns to certain investors out of the principal received from other, different investors. Madoff estimated the losses from this fraud were at least $50 billion.
According to regulatory filings, the Madoff firm had more than $17 billion in assets under management as of the beginning of 2008. It appears that virtually all assets of the advisory business are missing.
Madoff founded the firm in 1960 and has been a prominent member of the securities industry throughout his career. Madoff served as vice chairman of the NASD, a member of its board of governors, and chairman of its New York region. He was also a member of NASDAQ Stock Market's board of governors and its executive committee and served as chairman of its trading committee.
Large losers from the scam may include $7.3 billion fund Fairfield Sentry and $2.8 billion Kingate Global Fund, who both invested with Madoff.
Create E-mail AlertRelated Categories
General NewsInsiders' Blog
Trader Talk
Related Entities
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
