In 2001, reporter Erin Arvedlund wrote an article for the financial weekly Barrons that was skeptical of Bernard Madoff’s strategy and performance on Wall Street. She questioned how Madoff was able to offer good returns. She talks with Steve Inskeep about the impetus for her story and what she learned in the process.

Morning Edition, December 18, 2008

Category: Financial Press, Legal, Regulation, Video

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2 Responses to “Madoff Red Flags Were There All Along”

  1. EmJay says:

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  2. sloane says:

    Arvelund’s 2001 article really drives home the idea that Madoff was simply supplying a demand: dreamily consistent returns to those who were content to stick their heads in the sand.

    Dr. Tantillo did a short blog post on Madoff when this story first hit, explaining how Madoff’s success can be attributed to knowing his Target Market (not that he condones his behavior…).

    “He knew not to promise sophisticated people unsophisticated (read “extravagant”) returns. In other words, he knew people would walk away if he promised them the sun and moon, but 10 to 15% seemed about right. He was also reportedly very selective —not everyone could become a client— and that kind of exclusivity, if exerted by a credible party (like Madoff seemed to be), can have real power.”

    I wonder if investors will be more or less vulnerable to these sorts of schemes (believing what they want to believe), given the current economic client. Recent news might suggest that people will be more cautious, but a more desperate mindset could actually tip things further in this same direction.