Madoff

[SeattleUte]

I've noticed that since yesterday the $51 billion figure has become $65 billion. Makes me wonder if we even know the full extent of it yet.

How much of it is is the returns they thought they had but never existed?

[TripletDaddy]

People lose money on investments all the time. It's a critical element of our success as a nation. I don't think any of these victims should get one thin dime from taxpayers. Let them sue their trustees, advisors, directors, etc., if they had any.

I agree that people lose their money in investments all the time. Nobody disagrees with this. However, this was fraud, not an even playing field. If Merrill or SSB calls you up tomorrow and says, "oh, btw, those investments and statements we have been sending you....we made them all up..."...that isn't greed. That is getting duped.

Is there any proposition out there that the victims are going to get repaid money by the taxpayers? I haven't heard any such thing. Why would they?

The institutional investors may have some claims against the houses......most of the houses have liability insurance that may cover this to some extent, but my guess is that the insurance companies will argue that the houses did not do their due diligence (again, not really the fault of investors, unless you are saying that have called up SSB or ML and asked for a full audit of everything in which they trade).

Direct investors are screwed. They basically have lost everything.

[SeattleUte]

I agree that people lose their money in investments all the time. Nobody disagrees with this. However, this was fraud, not an even playing field. If Merrill or SSB calls you up tomorrow and says, "oh, btw, those investments and statements we have been sending you....we made them all up..."...that isn't greed. That is getting duped.

Is there any proposition out there that the victims are going to get repaid money by the taxpayers? I haven't heard any such thing. Why would they?

The institutional investors may have some claims against the houses......most of the houses have liability insurance that may cover this to some extent, but my guess is that the insurance companies will argue that the houses did not do their due diligence (again, not really the fault of investors, unless you are saying that have called up SSB or ML and asked for a full audit of everything in which they trade).

Direct investors are screwed. They basically have lost everything.

Even playing field. LOL. Is that what you think, say, the tech bubble was? For example, you had investment bankers who knew damn well JDSU was a house of cards while brokers in the same firm were pushing it to clients and on CNBC. Lawyers would get disbarred for such conduct that's perfectly normal in the financial markets. But some of us just took our lumps and didn't belly ache. Sometimes it's hard to even tell the difference between legal and illegal. In a sense, none of it is a level playing field. In another sense, it always is. These people chose to invest with a guy who was secretive, guaranteed impossible returns, and to not diversify, etc. I'm sick and tired of grown up people not taking responsiblity for their stupidity.

The article says they will probably get up to $500,000 a piece from the government, and some are suing the SEC for negligence (that's a frivolous lawsuit absent judicial activism; the lawyers ought to be sanctioned for bringing such suits in a perfect world).

[TripletDaddy]

Even playing field. LOL. Is that what you think, say, the tech bubble was? For example, you had investment bankers who knew damn well JDSU was a house of cards while brokers in the same firm were pushing it to clients and on CNBC. Lawyers would get disbarred for such conduct that's perfectly normal in the financial markets. But some of us just took our lumps and didn't belly ache. Sometimes it's hard to even tell the difference between legal and illegal. In a sense, none of it is a level playing field. In another sense, it always is. These people chose to invest with a guy who was secretive, guaranteed impossible returns, and to not diversify, etc. I'm sick and tired of grown up people not taking responsiblity for their stupidity.

The article says they will probably get up to $500,000 a piece from the government, and some are suing the SEC for negligence (that's a frivolous lawsuit absent judicial activism; the lawyers ought to be sanctioned for bringing such suits in a perfect world).

You are still not comparing apples to apples.

Madoff was preparing phony monthly financial statements for investors, committing mail fraud, inventing shell holds and securities that simply did not exist, etc. How can you compare that with the tech bubble? And you just said that you are sick and tired of people not taking responsibility for their own stupidity! Start by putting an end to yours.

You want to compare the illusory nature of the tech bubble with the deliberate and concerted conspiracy to defraud investors via a Ponzi scheme. They are not the same thing.

The issue here is not whether both sets of investors took risk when they invested. Of course both did. But to say that this is like the tech bubble won't win you many points on the mikewaters scale of intellectual bedazzlement.

[SeattleUte]

You are still not comparing apples to apples.

Madoff was preparing phony monthly financial statements for investors, committing mail fraud, inventing shell holds and securities that simply did not exist, etc. How can you compare that with the tech bubble? And you just said that you are sick and tired of people not taking responsibility for their own stupidity! Start by putting an end to yours.

You want to compare the illusory nature of the tech bubble with the deliberate and concerted conspiracy to defraud investors via a Ponzi scheme. They are not the same thing.

The issue here is not whether both sets of investors took risk when they invested. Of course both did. But to say that this is like the tech bubble won't win you many points on the mikewaters scale of intellectual bedazzlement.

What is your purpose here? To convince me that I should feel more sorry the victims? FAIL. I said I already feel a little sorry for them.

To convince me they should get some money from the government? FAIL FAIL FAIL. What about the shareolders in those gigantic Ponzi schemes called Bear Sterns and WaMu (what do you call loaning a million dollars to someone with no job then turning around and selling the loan off?)? Should they get some money?

It's a continuum. The line between fraud and bad investment is not bright. Fraud is one of the potential perils of investment. Hence something called due diligence. Madoff is an admitted fraud, but in the vast majority of cases there is a case to be made for fraud and the defendant is denying it, and it's a gray area.

What you are saying is like if San Diego State said it should be the regular season co-champion in basketball because a star player was injured when it played BYU the second time. Like injuries in sports, fraud is part of the risks inherent in the game.

[RobinFinderson]

It's a continuum. The line between fraud and bad investment is not bright. Fraud is one of the potential perils of investment. Hence something called due diligence. Madoff is an admitted fraud, but in the vast majority of cases there is a case to be made for fraud and the defendant is denying it, and it's a gray area.

With this bit, SU wins the round. *DING* *DING* *DING*

[beelzebabette]

With this bit, SU wins the round. *DING* *DING* *DING*

Hence the reason boxing typically has three judges--so a judge, either not knowing what he's talking about or with bias can't throw the fight. Our economy is built on individual investors being able to rely on audits or go through brokerage houses or transaction costs would be too high.

[SeattleUte]

Hence the reason boxing typically has three judges--so a judge, either not knowing what he's talking about or with bias can't throw the fight. Our economy is built on individual investors being able to rely on audits or go through brokerage houses or transaction costs would be too high.

These were not "inidividual investors" like us. They were going it totally on their own, and thought they were in on a special deal. This is not like you putting your money in a Bank of America mutual fund. They were too smarty pants to want to invest with the plebes like us. Even so, you'd be a fool to put all your money even in a big institutional fund. By the way, with a couple of exceptions, Madoff's investors were not institutional investors.

So who should we feel more sorry for, Wamu stockholders or Madoff investors? Do you think Wamu was totally on the up and up?

[RobinFinderson]

SU asks the question, why didn't these investors exercise due diligence? I would ask the question, how could they? Isn't a big part of the Madoff Ponzi scheme how he acted in secrecy? The man wouldn't let people check his books, claiming that to do so would reveal proprietary trading secrets. Isn't the possibility of riding roughshod over the rules implicit in this bargain? Madoff is the equivalent of a butcher offering packaged meat. The consumer doesn't want to see the cow, or the slaughterhouse, or hear its cries when its throat is cut as it dangles upside down (kosher slaughter). The consumer wants bloodless cuts, wrapped in saran wrap, stacked neatly. Isn't that what Madoff's investors had to know when Bernie demanded so much secrecy? That there was a distinct possibility that Madoff was, at the very least, pushing the law to its limits? The investors wanted a butcher who would slit throats behind an opaque wall then wrap up the meat in brown paper and serve it up with a smile.

[SeattleUte]

That there was a distinct possibility that Madoff was, at the very least, pushing the law to its limits? The investors wanted a butcher who would slit throats behind an opaque wall then wrap up the meat in brown paper and serve it up with a smile.

Well put. Here's an irony. All of us want someone managing your money who has more information than we mortals could possibly access and sooner than we could acess it. Madoff's attaction was an aura of access to inorfation. Of course the idea is that he knows things few people know, and that maybe he's not supposed to know, but it's all very occult in any event. Very chic and sexy and lucrative; not knowing is part of the aura; due dilligence totally at violent odds with the whole point.

[SteelBlue]

Madoff's accountant now being charged with fraud:



http://www.businessweek.com/ap/finan...n_id=rss_daily

Friehling ran an accounting office in a nondescript suburban building north of New York City, and quickly drew scrutiny. Experts in accounting said it would be preposterous for such a tiny firm to audit properly an operation the size of Madoff's.

He had served as Madoff's auditor from 1991 through 2008 while he worked as the sole practitioner at Friehling & Horowitz. He was paid a tidy sum by Madoff: Prosecutors said he made between $12,000 and $14,500 a month from 2004 to 2007. That works out to $144,000 to $174,000 a year.

[TripletDaddy]

Madoff's accountant now being charged with fraud:



http://www.businessweek.com/ap/finan...n_id=rss_daily

All of this fraud, securities violations, collusion, fake financial statements, fake audit certificates, etc.....it all reminds me exactly of the tech bubble burst earlier this decade. it is uncanny.

[beelzebabette]

Madoff's accountant now being charged with fraud:

http://www.businessweek.com/ap/finan...n_id=rss_daily

I wondered when I saw that today how, even if he was "rubberstamping" how he could have gotten away with it for so long. CPAs conducting audits have to have a peer review every three years. Every peer review I went through, thoroughly reviewed documentation (and technique, in the process). An audit involving anything SEC related got even more scrutiny, especially the last several years.

This is one case I will watch with great interest.

[TripletDaddy]

I wondered when I saw that today how, even if he was "rubberstamping" how he could have gotten away with it for so long. CPAs conducting audits have to have a peer review every three years. Every peer review I went through, thoroughly reviewed documentation (and technique, in the process). An audit involving anything SEC related got even more scrutiny, especially the last several years.

This is one case I will watch with great interest.

perhaps it was not an audit, but a review, which has a much lower standard of scrutiny.

It would not have been uncommon for Madoff to have drawn up docs for his investors and in the fine print they agree to reviews as opposed to audits, and the lay person doesn't know the difference.

Even so, the SEC had several chances to investigate and they never really did, even after complaints of irregularities. It is pathetic, yes.....but maybe not entirely shocking.

[SeattleUte]

perhaps it was not an audit, but a review, which has a much lower standard of scrutiny.

It would not have been uncommon for Madoff to have drawn up docs for his investors and in the fine print they agree to reviews as opposed to audits, and the lay person doesn't know the difference.

Even so, the SEC had several chances to investigate and they never really did, even after complaints of irregularities. It is pathetic, yes.....but maybe not entirely shocking.

SOVERIGN IMMUNITY. The king can do no wrong.

What you need to realize is that in the Madoff situation everyone involved, and I mean everyone, was part of the same corrupt culture.