SEC Investigates “Stunning Fraud” of “Epic Proportions”
December 12th, 2008 at 12:58 am - by Giuseppe Burtini
In one of the largest stories of corporate fraud in history, Madoff Investment Securities, LLC. one of the top market making firms on Wall Street and the founder, Bernard Madoff, 70, are being charged with what the SEC calls “stunning fraud that appears to be of epic proportions,” allegedly over $50 billion U.S.
The Wall Street firm, the Securities and Exchange Commission said Thursday, operates a hugely structured and sophisticated Ponzi-type pyramid scheme, where the firm’s clients are paid their profits out of the principle investments of it’s future clients. Madoff allegedly told two senior executives within his company about the scheme Wednesday afternoon, claiming total losses to their clients of over $50 billion.
Madoff’s explanation to his senior executives were apparently out of shame, the SEC claims he told his employees that he was “finished,” and that the company is “all a big lie.”
In a press release Thursday, the SEC’s Linda Thomsen, Director of the Division of Enforcement said “We are alleging a massive fraud — both in terms of scope and duration[.] We are moving quickly and decisively to stop the fraud and protect remaining assets for investors, and we are working closely with the criminal authorities to hold Mr. Madoff accountable.”
SEC regulatory filings from the company show that the company was holding approximately $17 billion in investment assets for it’s clients’, all of which, it seems are missing. The SEC is involved in an on-going investigation.
The SEC filed with the Manhattan federal court this afternoon to have Bernard Madoff his company’s assets frozen immediately. Madoff was arrested Thursday and charged with securities fraud, punishable by up to 20 years in prison and $5 million in personal fines, he immediately posted $10 million bail.
Madoff, at age 70, has been a member of the financial industry for his entire career, serving on the board of NASD, the self-regulatory institution preceding FINRA, and a member of NASDAQ’s board of governors.
The case is U.S. v. Madoff, 08-MAG-02735, U.S. District Court for the Southern District of New York (Manhattan).
The firm, Madoff Investment Securities, LLC., is split in to multiple units, including it’s well known market maker unit. The market making unit is not involved in this case, only the asset management and holding division.
