Sunday, January 11, 2009

Madoff Fraud: More Than One Pair of Hands?

$50 billion is a lot of money, and while many "feeder" funds made this number possible, the thought that this fraud took more than one pair of hands to be pulled off only seems a very reasonable assumption for me to make. That the Securities & Exchange Commission (SEC) was asleep at the switch is an understatement. But, what we all must realize is that the SEC for many years has been influenced by a Congress and Presidents that sought to reduce oversight and permit more investors to become marks of the securities industry. The heavy hitters and large political contributions that come to the politicians from Wall Street, the brokerage and money management industry, are meant to ease the way and make it possible for marks to be shot like fish in a barrel. The same politicians that now act so upset by the Madoff fraud are many of the same politicians that did the securities industry bidding in the halls of congress. How did this fraud get over looked for so long without the help of "friends" on the inside? It is certainly time for all Americans to ask where was the oversight, regulations and enforcement and bring pressure on their representatives to rebuild and correct the weaknesses of the SEC. Finally, even the wealthy got hurt. Now the wealthy investors can know what smaller investors have faced and have had to deal with for many years. This time the big investor got hurt. Perhaps now we will see the proper actions taken to protect investors from the future Bernard Madoffs of the world.

Stay tuned.


Butch said...

You know what, I hadn't thought of it that way but now that I do, and bring up some of the names that have been listed in the news, I think your right. We always say, wait until it happens to you or so and so, then things will change. Well, maybe this is what it will take. Most of those hurt by Madoff were the more financially healthy individuals in the world. Most of them can probably make a good part of it up again before they retire, it is unfortunate that some really good charities and institutions got hurt but I also think there was some greed amongst them too. After all, they were going for that "if it looks too good to be true then it must be" scenario.

moneythoughts said...

Butch, thanks for your comments. I think we will all learn more about the details as Madoff is questioned and as the investigation takes a look at the details (paper trail). It takes more than one pair of hands to carry on a ponzi for so many years. While it may be possible for one person to hind the details for a short period of time, the length of time involved leads me to believe that at least another pair of hands or two were involved. The "feeder funds" may have been taken in, but your comment about the perofrmance of Madoff's fund should have alarmed more people than the gentleman in Boston (who tried to draw the SEC's attention to the impossible performance).