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Thread: Madoff debacle reveals stunning failure of due diligence

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    Madoff debacle reveals stunning failure of due diligence

    I'm stunned that there has been no mention of this so far at DP. Are we that weary of bad news coming from Wall Street, or is the story not as sexy as a shoe tossing?

    Bernie Madoff has committed the largest fraud ever recorded. The loss is estimated to be between $17 to $50-billion (yes, with a "b"). So far, the victims have been friends, banks, business and charities, and of course, millions of people who invested in these "hedge funds."

    From what I understand, he used a simple pyramid scheme. Got people to invest with a guaranteed return, so in order to pay the return, he recruited more to invest. And so on. It was that simple, and yet few caught on. Someone did report him years back, but it fell on deaf ears.

    These investments start with a meeting between the sharp-eyed, skeptical advisers and executives from a money manager such as Madoff Investment. The advisers should ask how the money is managed.

    You're not pressing Colonel Sanders for the secret blend of 11 herbs and spices on his fried chicken. You're simply asking hedge fund managers to explain just how they generated the returns they claim. Money managers are expected to offer up detailed, audited results. They may even be politely asked to produce their auditors.

    Bernie Madoff never, ever explained just how he was making money. There was vague talk of owning blue-chip stocks and writing covered calls. But most of this business was done on a trust-me basis, by a trader with five decades of experience, credentials such as a stint as Nasdaq's chairman, and a great story of getting started in markets with $4,000 earned as a lifeguard.
    reportonbusiness.com: Madoff debacle reveals stunning failure of due diligence
    No men are anywhere, and Im allowed to go in, because Im the owner of the pageant and therefore Im inspecting it, Trump said... Is everyone OK? You know, theyre standing there with no clothes. Is everybody OK? And you see these incredible looking women, and so I sort of get away with things like that.

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    Re: Madoff debacle reveals stunning failure of due diligence

    Quote Originally Posted by Middleground View Post
    I'm stunned that there has been no mention of this so far at DP.
    No mention?

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    Re: Madoff debacle reveals stunning failure of due diligence

    Are we that weary of bad news coming from Wall Street, or is the story not as sexy as a shoe tossing?
    Media and Wall Street are tied together--they want this fraud to be under the bed as long as possible. It should be a bigger story and should be in the Press alot more. The media likes to tell us continually on how just Madoff did this and maybe just a few others--a sign of hiding something. Don't believe 50 Billion and one man or a few men could pull it off.

    YouTube - Another Wall Street Theif....Bernard Madoff.....exposed

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    Re: Madoff debacle reveals stunning failure of due diligence

    Quote Originally Posted by JMak View Post
    Damn... I did a search and nothing came up.
    No men are anywhere, and Im allowed to go in, because Im the owner of the pageant and therefore Im inspecting it, Trump said... Is everyone OK? You know, theyre standing there with no clothes. Is everybody OK? And you see these incredible looking women, and so I sort of get away with things like that.

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    Re: Madoff debacle reveals stunning failure of due diligence

    Wow. Guy should have pulled his punches a little, maybe. Subtlety is not his trump card. Any number of other sarcastic quips.

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    Re: Madoff debacle reveals stunning failure of due diligence

    Quote Originally Posted by GOP Socialist Soldier View Post
    Media and Wall Street are tied together--they want this fraud to be under the bed as long as possible. It should be a bigger story and should be in the Press alot more. The media likes to tell us continually on how just Madoff did this and maybe just a few others--a sign of hiding something. Don't believe 50 Billion and one man or a few men could pull it off.
    Not sure what you're getting at here. Are you saying Madoff is a scapegoat?
    No men are anywhere, and Im allowed to go in, because Im the owner of the pageant and therefore Im inspecting it, Trump said... Is everyone OK? You know, theyre standing there with no clothes. Is everybody OK? And you see these incredible looking women, and so I sort of get away with things like that.

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    Re: Madoff debacle reveals stunning failure of due diligence

    The real story is the SEC failed to investigate Madoff and looked the other way, despite being tipped to his Ponzi scheme in 1999.

    The SEC big shots get million dollar jobs after they leave the agency with top Wall Street institutions. It's a sham and needs a total overhaul.

    This guy below was a key whistle blower and will hopefully be releasing a book soon.

    Dealbreaker - A Wall Street Tabloid - Business News Headlines and Financial Gossip - Gary Aguirre

    Another problem was that Aguirre kept saying that his real beef was not with the targets of his investigation but with the SEC. Aguirre was alleging that the most powerful firms on Wall Street got special treatment from the SEC, in part because the regulators had a too cozy relationship with the folks they were supposed to be regulating. This story never got as much attention, perhaps because it was a lot less sexy.

    Unfortunately it was this part of Aguirre tale that made the most sense. There is a revolving door between the SEC's upper echelons and the top Wall Street firms, who often hire former investigators, regulators and commissioners once they leave the agency. What's more, the SEC was more or less created by Wall Street to help boost investor confidence by creating the impression that someone was policing the financial sector and protecting investor interests. And from the start the SEC had helped stifle competition on Wall Street by increasing regulatory overhead and banning many of very the practices that had led some Wall Street giants to accumulate their power and capital. With the SEC around, for instance, it became much harder to build a new investment banking giant. (And this is one reason so much of the brains on Wall Street has fled to private equity and hedge funds.)

    And this might be the heart of the reason that the real heart of Aguirre's story never got the attention it deserved, while the less-substantiated and more thrilling insider trading storyline hogged the headlines. At it's heart, Aguirre's story is not even news. It's something we've known for a long, long time. And that old story about how bureaucracies operate doesn't really translate into the sort of civil rights storyline reporters think will win them Pulitzers. So we don't hear much about that.
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    Posted in: Gary Aguirre, SEC, SEC
    Gary Aguirre: The SEC Is An Insider's Club
    Posted by John Carney, Feb 27, 2007, 10:26am

    garyaguirrefeb07.jpgRemember Gary Aguirre? He was the former Securities and Exchange Commission investigator whose explosive charges led to a series of hearings on Capital Hill and a lot of alarm-bell ringing publicity, particularly from Gretchen Morgenson of the New York Times. Aguirre's main charge was that he was fired from the SEC after an investigation into possible insider trading led him toward a top Wall Street executive.

    Today the Guardian reminds us that not only is Aguirre still around. So are the problems he became famous exposing:

    "What you have at the SEC is people rotating from jobs where you make $180,000 a year into jobs where you make over a million," Aguirre tells the Guardian in an interview, on what he sees as a mutually back-scratching relationship between the regulator and Wall Street. "It's very friendly - it's a club. I'm here, I'm inside, now I'm outside, now I'm inside again.

    "When the SEC starts playing favourites and they decide not to go after Wall Street elite and focus on small fry, then they're not focusing on the players that really impact the capital markets. It's not the penny stock dealers that could trigger a credit crisis in this country."
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    Re: Madoff debacle reveals stunning failure of due diligence

    Not sure what you're getting at here. Are you saying Madoff is a scapegoat?
    Actually I didn't think of the scapegoat factor, what I was getting at was that Madoff had help at many different levels to cover this thing up. I don't just believe in "poor" policing and oversight--that's an excuse, not a reason.

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    Re: Madoff debacle reveals stunning failure of due diligence

    How is Madoff's ponzi scheme any different than the ponzi scheme known as social security?

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    Re: Madoff debacle reveals stunning failure of due diligence

    Quote Originally Posted by Erod View Post
    How is Madoff's ponzi scheme any different than the ponzi scheme known as social security?
    Madoff didnt use a gun.
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