The Bernard Madoff Investment Scandal

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Bernard Madoff had full control of the organizational leadership of Bernard Madoff Investments Securities LLC. Madoff used charisma to convince his friends, members of elite groups, and his employees to believe in him. He tricked his clients into believing that they were investing in something special. He would often turn potential investors down, which helped Bernard in targeting the investors with more money to invest. Bernard Madoff created a system which promised high returns in the short term and was nothing but the Ponzi scheme. The system’s idea relied on funds from the new investors to pay misrepresented and extremely high returns to existing investors. He was doing this for years; convincing wealthy individuals and charities to invest billions of dollars into his hedge fund. And they did so because of the extremely high returns, which were promised by Madoff’s firm. If anyone would have looked deeply into the structure of his firm, it would have definitely shown that something is wrong. This is because nobody can make such big money in the market, especially if no one else could at the time. How could one person, Madoff, hold all of his clients’ assets, price them, and manage them? It is clearly a conflict of interest. His company was showing high profits year after year; despite most of the companies in the market having losses. In fact, Bernard Madoff’s case is absolutely stunning when you consider the range and number of investors who got caught up in it.

Bernard Madoff – Case Summary

Bernard Madoff opened his firm in 1960. His business began to grow when his father-in-law Saul Alpern, who was an accountant, came to the firm. Because there were a lot of competitive firms at that time, Madoff decided to use innova...

... middle of paper ...

... The Wall Street Journal.

Web site: http://s.wsj.net

Berenson, Alex; Henriques, Diana B. (December 13, 2008). "Look at Wall St. Wizard Finds Magic Had Skeptics". The New York Times.

Web site: http://www.nytimes.com

Hamilton (December 13, 2008). "Madoff's reliable returns aroused doubts". LA Times.

Web site: http://www.latimes.com

Harris, Larry (2003). Trading and Exchanges: Market Microstructure for Practitioners. Oxford University Press. p. 290.

Web site: http://books.google.com

Scannell, Kara (January 5, 2009). "Madoff Chasers Dug for Years, to No Avail". The Wall Street Journal.

Web site: http://online.wsj.com

Biggs, Barton (January 3, 2009). "The Affinity Ponzi Scheme". Newsweek.

Web site: http://www.newsweek.com

Creswell, Julie (January 24, 2009). "The Talented Mr. Madoff". The New York Times.

Web site: http://www.nytimes.com

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