Case Study - Madoff Securities

Abstract

The biggest fraud in the United States Financial Market was committed by Bernie Madoff, one of the most recognize and respected financial expert of Wall Street. The detail surrounding the Ponzi scheme was kept a secret for a long period of time until he finally cannot keep up with payment requested from investors. The security Exchange commission (SEC) with all the laws, and regulations that govern the financial market were also kept in the dark including accounting firms that audit the company. As big as the scheme and as complicated as it was it did not keep everyone in the Dark. There were documentation and evidence released to the SEC about the company fraud activities several years before it became bigger and finally burst. Even with the detailed financial analysis presented by Markopolos, the SEC was either too influenced or intimidated by Madoff’s stature that they denied the need to scrutinize the technicalities of the business.

Regulatory oversight that before the Ponzi scheme and the main reasons for not discovering the scheme.

Operated through a complex, cryptic structure Bernie Madoff, CEO of Bernie L. Madoff Investment Securities (BMIS), perpetuated the most embellished Ponzi scheme the world has ever seen. The basis of the securities fraud that took place approximately between 1991 – 2008 was influenced by Bernie Madoff’s reliance upon an unqualified staff, outdated software, organizational seclusion, a personal halo effect, and weaknesses in the regulating body. Madoff had the confidence of the public, yet to pull off such an elaborate scheme, he relied on a startling number of family members, vital accomplices working on the illegal trading floor such as Frank D. Pascali, IT staff members, and a separate BMIS branch of international employees in the U.K. to seemingly legitimize the whole thing. Domestic and European institutional investors, friends and acquaintances of Madoff’s, and an additional couple of thousand people who had...