Wednesday, December 24, 2008

Bernard L. Madoff - the SEC failed to investigate repeated defalcations

Mr. Madoff was a broker-dealer; he held himself out as a sophisticated "genius" at the craft of investing OPM - Other People's Money. The OPM stake was worth billions. It turns out, he simply operated a Ponzi-scheme. He did not craft a brilliant trading strategy, he made no market, and he managed no portfolios in his exclusive floor of a New York skyscraper. He simply took money from people. How smart does anyone have to be to do this?

The SEC had received numerous complaints against Madoff. In spite of documented fraud claims, however, the SEC failed to scrutinize the Madoff securities "market maker" operations which were clearly within its jurisdiction.

The Madoff swindle is in excess of $50 billion. This type of theft at this scale will carve a large hole in the free market, as investors face the fact that hedge fund managers and investment brokers are not "policed" or regulated in any effective way. Thus, we see the debilitation of market entry -- investors now joined with lenders in an unwillingness to place their funds into a "marketplace" overrun by predators. Capital not already in the hands of the pirates, is held hostage or at bay, and no longer available to productive enterprises.

1 comment:

  1. Yes, the SEC failed repeatedly and miserably, and I want to see the bastards hang, although Obama's policies generally seem to favor simply moving on, which amounts to giving the bad guys a pass.

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