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Bernard Madoff Ponzi Scheme Case Summary

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December 2008, Bernard Madoff admitted that he has been running a Ponzi scheme. Investor losses were between 50 to 65 billion U.S. dollars and it became Wall Street ‘s biggest investment fraud. Madoff confessed that instead of investing clients' funds, he used the money deposited from new clients to finance the withdrawals of earlier clients. After the financial crisis in the fall of 2008, more and more of investor were withdrawing funds and mad doff was unable to pay them. Madoff pleaded guilty to criminal charges including securities fraud and money laundering. He was sentenced to 150 years in federal prison. Madoff's auditor also faces criminal charges, allegedly failing to conduct due diligence (reuters.com 2009). …show more content…

Corporate responsibility for financial report: Section 302 requires the CEO and CFO to certify in each annual or quarterly report that officer reviewed the report and that the report does not contain any untrue or omission material fact that made the statement misleading. In addition, the statement fairly present in all material aspects the financial condition and results of operations. The signing officers are responsible for establishing and maintaining internal control. The officer are required to disclose to the auditors and the audit committee of the board of directors all significant deficiencies in internal control, which could adversely affect the ability to record, process, summarize, and report disclose any fraud, whether material or immaterial that involved management or employees who play a significant role in internal …show more content…

Corporate responsibility for financial report: Section 906 requires corporate management to certify reports filed with the SEC, such as the annual 10 and quarterly 10Q. This section also provides for criminal penalty of up to 5 million or 20 years imprison (SOX 2002). SOX legislation basically requires management of public companies to assess and report on the effectiveness of internal controls for financial reporting using recognized framework. As SOX went into effect, third party review of internal controls to comply with SOX and another to provide an audit of financial statements. If the internal audit revealed any significant deficiencies, it is required to be disclosed by the signing officers of the company. Companies found it was in their best interests to address any internal control weakness before third party

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