Posted on 12/26/2008 5:09:43 PM PST by FoxPro
Is the author of this complaint any relation to Madoff. They appear to have the same last name.
Great post -— I think this Lasry predator is very slippery and clever. From what I’ve read he’s still doing well....though not as much business being done
>>Does the SEC actually regulate hedge funds?<<
Not really, except indirectly, through their trades in public markets (monitoring for illegal activity, manipulation, etc.) but not internals, audits or trading systems. Not the case with Madoff’s fund operations, though he did run his own ECM and even paid for “order flow” which could have alerted SEC that it's a potential front running operation - which is illegal and ECNs, like all exchanges, are under purview of SEC. So they could start investigating him from that side of “the Street”. Though ECNs didn't come into the picture until late 1990s, he still had run a trading operation - whether before he started Ponzi scheme or after remains to be learned.
Mary Shapiro, who is coming in as head of SEC, has been CEO of (NGO) FINRA, which has can do more vigilance and “oversight” of hedge funds than SEC.
>>Also, I suspect the SEC receives hundreds of “hot tip” memos like this each month. ... I suspect most of those “hot tip” memos are written by people who hope to win a SEC bounty, or by people with an ax to grind, or by people who are mentally deranged.<<
Also, often short sellers send letters for SEC to investigate the company where they have built a short interest in, hoping that investigation or the notice of complaint itself will help their short position, whether there really is something wrong with the company or not.
>>I suspect a low level staffer read through the Markopolis memo, made some phone calls, heard that “Madoff is OK,” <<
That's what really needs to be investigated - the trail of the document to particular bureaucrat(s) that reviewed the letter(s) and what, if any, involvement of high ranking Democrats friendly or with financial ties to Madoff. I assume that, just like in most other government agencies and Departments, most bureaucrats and staffers are Democrats.
>>I also have begun to doubt the $50 billion price tag on this fraud. ... It's been two weeks now, and the disclosed investments are still under $25 billion.<<
Well, more seems to be coming from Europe every week, and the approximately $50B figure over 20+ years of operation, may include redemptions which have not been reinvested back, as well as possible “offshoring” of some money from the funds, whether for Madoff himself or on behalf of some investors.
>>Suddenly, he tells the exact truth about how much money he lost? ... Maybe.<<
He might not know exactly, himself. But it's a good round number, and probably close enough to the truth, give or take a few billion dollars.
They weren’t stupid; it’s clear from this report that anyone and everyone in the industry who was familiar with BM understood it to be a fraud.
I’m sure even the investors knew he was up to something but chose to look the other way because they were all making lots of MONEY! GREED pure and simple.
I hadn't thought about the the short selling motive for whistle blowers.
And, I hadn't thought at all about the political calculus, namely, Madoff’s long and lucrative support of the Democratic Party. Very good catch. Completely missed it.
Re: Total Losses.....
Looks like you may be correct about that, too.
Bloomberg has apparently increased its estimate to $36 billion, but I can't find the story at their website.
However, some of that “loss” may be balanced by Madoff’s regular dividend.
Consider....the SP 500 is down 35% over the last decade, and QQQ is down more than 40%.
For those who were “lucky” enough to pull in Madoff’s 1% per month for an extended period of time, they might actually get close to break even, although their principal is now probably zero.
And, no doubt Madoff enticed many risk averse investors, people who would not have invested in equities, so your heart has to go out especially to that group, most of whom are probably elderly and have no way to recover.
I’ll be interested in knowing when someone is in a position to approach any kind of a tally on how much money was truly “lost” to investors vs. how much “profit” had already been redeemed in the past by people who went away or reduced their exposure, how much was “paper” profit on Madoff statements but not money that people had ever previously forked over to him (though there I suppose that estimates of income foregone from other potential investments must enter in somehow).....
If Madoff’s statements said your money doubled over a certain period of years, did you really lose all of the inflated amount or only your original investment? Or your original investment plus what you COULD have made from other investments with the same money? But who decides how to count that? Seems like a tough problem to come up with an accurate estimate of the losses, even if you had perfect access to Madoff’s records etc.????
It's going to be a long and bloody legal mess, and in the process, hardly any "winners" and many losing even more than they had already lost to Madoff, to lawyers and public opinion.
NYP - Legal Pros Get Primed For A Payday From Madoff Scandal
December 28, 2008 --
Leave it to the lawyers to find a silver lining in the Bernie Madoff scandal.
Just as it began to look as if the credit crunch was going to put the squeeze on attorneys, the alleged $50 billion Ponzi scheme by Madoff swooped in and is breathing new life into the legal profession.
Since Madoff's Dec. 11 arrest, Lawsuits have been swirling, and the initial string of legal complaints suggests the list of litigation targets will be just as varied as the number of people who say they were swindled by Madoff.
....
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