Madoff Scandal?

[TheMentat]

http://www.bloomberg.com/apps/news?pid=20601087&sid=a3uKf5P1lFmg&refer=home

Details seem to be pretty murky surrounding this, but people are saying that this guy managed to make $50 BILLION evaporate via some sort of Hedge Fund turned Ponzi scheme. If I understand this correctly, this can't bode well for the "unregulated" parts of the money management industry (Hedge Funds, Prop Trading Desks, etc).

On another note, they need to seriously jack up the penalties for these douchebags that violate their fiduciary duties.

[holtjv]

It will be interesting to see how much press this gets. It absolutely dwarfs other ponzi-ish schemes out there and there are so many dynamics working: street relationships, the sons, the front running (which I don't think happened, btw), etc.

Judging by the press, I think this story will die.

[jyl]

I saw this in an article:

The company made its own trades and held the shares it bought, unusual practices that kept its activities hidden from view. Madoff also avoided filing disclosures of its holdings with the SEC; the firm said that at the end of every reporting period it sold its holdings and held only cash. Such a tactic is highly unusual because it exposes a fund to large losses by forcing it to sell assets without regard to price.

Madoff, though a pioneer of electronic trading, also refused to provide clients online access to their accounts.

The underlined part is incredible. I can't believe that anyone invested with this fund.

[the]

It hasn't been a great year for Chris Cox. He was such a respected guy in congress. Must be regretting the move.

[TheMentat]

Originally Posted by holtjv

It will be interesting to see how much press this gets. It absolutely dwarfs other ponzi-ish schemes out there and there are so many dynamics working: street relationships, the sons, the front running (which I don't think happened, btw), etc.

Judging by the press, I think this story will die.

I suspect that public outrage surrounding this may be somewhat muted, given the fact that the VAST majority of the losers here were "big players", as opposed to joe sixpack's 401k...

Regardless, these are some HUGE numbers we are talking about here.

As an aside, I highly doubt his sons weren't complicit in this whole thing.

[Hugh R]

Apparently John Snow the first (what was it .. Treasury Secretary under Bush) is involved.

[jyl]

Originally Posted by TheMentat

I suspect that public outrage surrounding this may be somewhat muted, given the fact that the VAST majority of the losers here were "big players", as opposed to joe sixpack's 401k...

Regardless, these are some HUGE numbers we are talking about here.

As an aside, I highly doubt his sons weren't complicit in this whole thing.

This thread isn't attracting much action, so you are probably right. Not really a joe sixer story.

And, sorry to say this, but the rich families who invested 100% of their wealth in a hedge fund that they'd didn't understand, with a strategy and a history of returns that didn't make sense, and red flags like no SEC filings and a three-man accountancy doing the auditing - they were asking for it.

[JeffO]

I read today that all businesses and assets are frozen. That means 250 partners and associates of his law firm do not get paid on the 15th. Add the support staff and it looks like sad holidays for a lot of people.

[jyl]

32K jobs cut in financial services sector, just in Nov.
130K jobs cut in the industry so far in 2008.
Citigroup will cut 53K more. B of A 30K more.
Probably will be 300K jobs lost from the sector by end 2009.
I'm getting "goodbye" emails and hearing of people who've been "disappeared" on a daily basis now.
Its like 2001/02 but will ultimately be much worse.