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Bernie Madoff Research Paper

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Bernie Madoff was an American financier and former chairman of the NASDAQ stock exchange. He ran one of the largest Ponzi schemes in history. He built an elaborate scheme that lasted for decades, fooling investors and experts alike. To start, the promise Madoff enticed investors with the promise of consistently high returns. He claimed to have a secret strategy that allowed him to generate steady profits, even during market downturns. This promise of financial security is incredibly appealing to many. Bernie Madoff created his investment firm without many people. He targeted wealthy individuals and institutions, making them believe that they were part of an elite club. This makes people more willing to invest large sums of money. Madoff claimed …show more content…

As long as new funds keep flowing in, Madoff could continue to pay off existing investors and maintain the crime. The scheme eventually collapsed in December 2008, during the global financial crisis, when Madoff confessed to his sons that the investment business was a fraud. The estimated losses from the scheme were around $65 billion, making it one of the largest financial frauds ever. The scheme unraveled during the 2008 financial crisis when investors started to withdraw their money and Madoff couldn't keep up, proving the fraudulence. Madoff was arrested and pleaded guilty to various charges, including securities fraud, investment advisor fraud, and other crimes. He was sentenced to 150 years in prison, where he passed away in 2021. It was a shocking and devastating event that had a significant impact on the financial industry and investor trust. The fallout from the Madoff Ponzi scheme was devastating. Many investors lost their life savings, charities were severely impacted, and the reputation of the financial industry took a hit. It highlighted the need for stricter regulations and increased transparency to protect investors from fraudulent

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However, the SEC failed to properly investigate to stop the financial fraud led by Madoff. When the SEC was given the several reports documenting the risk of fraud, the SEC ignored and failed to investigate a scheme that could have been prevented during the first investigation submitted in 2000. 4. Does the fact the Madoff offered less outrageous returns (10-18 percent per year) on investments compared to Ponzi’s promise of a 50 percent return in only 90 days make Madoff any less unethical? Why or why not?

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Bernie Madoff is known for a scandal that rocked Wall Street and caused financial tremors around the world. Bernard Madoff’s alleged Ponzi scheme cost folks around the world billions. Bernie Madoff stole approximately $65 billion from people. When this scandal first broke through to the public people that Bernie had stolen money from would show up at his front door and demand their money back. Many people say that Bernie pulled off this Ponzi Scheme very brilliantly.

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Bernie Madoff ran one of the biggest Ponzi schemes in history. Throughout all the years he was running his scheme, there were several opportunities for the Securities and Exchange Commission (SEC) to catch and stop his activities. Instead, failure to follow through in investigations allowed Mr. Madoff to continue his Ponzi scheme for as long as it did. The most significant reason investigations into Madoff failed where because the SEC was incompetent. They missed red flags, failed to follow through on tips, and allowed personal biases to get in the way of uncovering his scheme.

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He was found guilty on two separate accounts of securities fraud, and another separate account of conspiracy to commit securities fraud involving his publically traded hedge

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In the Bernie Madoff case, those who were aware of irregularities

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He worked at NASDAQ which is why most of his clientele trusted him and his promise of high returns. Madoff would invest people's money with the promise of high returns. His business grew as he began to take on more investors to keep the scheme going. The SEC was warned that something was not right with Madoff, however,

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The Wall Street firm Goldman Sachs was one of the biggest investment banking firms in the world, but was blamed for the 2008 financial crisis. Goldman Sachs claimed that their most important assets were their people, clients and their reputation, however they were accused of betting against the securities that they were selling. John Paulson, an American hedge fund manager with an opposite economic interest, lured the clients into deals worth billions of dollars, knowing that the probability of them going bust was very high. This exotic deal was called ABACUS, and Goldman Sachs was charged by the Securities and Exchange Commission (SEC) for their unacceptable behaviour of not providing complete information about ABACUS to the investors. The

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A critical factor was the management of the company, to anyone outside of the company inner circle it was a black box (Economist). Madoff also made sure he was the only one who knew about these transactions, allowing his employees to continue making trades. He would even keep his family in the dark until the 2000s which would lead to his arrest. Regardless the main way he ran the company was by selecting a certain client, avoid those that asked many questions. Take only those that wanted money, not how he got allowing him the secrecy, needed to keep such large sums of money

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In 2009 he was found guilty of orchestrating a ponzi scheme that lost $64.8 billion of investor’s money. New York Times said, “Its unraveling took tens of billions of dollars of fictional wealth from thousands of victims around the world.” And to make matters worse, this all happened during a very rough time for the United States. Kaleigh Alessandro stated that, “Amidst the nation’s most serious financial crisis since the Great Depression, we all learned of Madoff’s devastating scheme.”

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Many of his clients were already abundantly wealthy and seeking a stable platform to shelter their money. His scheme met their needs and his. Madoff's proposal also spoke to their egos, in the form of being part of a program that provided exclusivity. Each felt as though they were in bed with the 'best of the best'. How could they go wrong when some of the biggest names in the world were securing their wealth with Madoff?

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“Chasing Madoff”, a documentary released in 2010 portrays the way the whistleblower, Harry Markopolos, uncovered Bernie Madoff’s fraud scheme and his ten-year struggle to get the SEC to investigate. The documentary begins with an introduction to Harry Markopolos and his former coworkers Frank Casey and Neil Chelo. The three men work in finance, with investment portfolios. They were aware that in the finance industry there was much talk about an investment company making their customers high returns. Casey came across some investment information from a client of Madoff and gives the information to Markopolos to look over.

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