Posts filed under “Legal”

SEC Ignored Detailed 2005 Complaint re: Madoff

What follows is the Harry Markopolos complaint to the SEC, circa November 2005, identifying 29 red flags that Madoff was a fraud. This highly detailed complaint was filed regarding the apparent Fraud at Madoff Securities.

It was ignored by the Christopher Cox SEC, which was too busy concocting schemes to dismantle the SEC rather than investigate complaints such as this.

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Madoff_SECdocs_20081217

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Sources:
Cox “Worked to Dismantle The SEC,” Says Commission Vet
Zachary Roth
TPM Muckraker, December 19, 2008, 1:32PM

http://tpmmuckraker.talkingpointsmemo.com/2008/12/cox_worked_to_dismantle_the_se.php

madoff_secdocs_20081217 (PDF)

Madoff Misled SEC in ’06, Got Off
GREGORY ZUCKERMAN and KARA SCANNELL
WSJ, DECEMBER 18, 2008

http://online.wsj.com/article/SB122956182184616625.html

Category: Hedge Funds, Legal, Regulation

Circle of Friends

Via the WSJ:

Category: Digital Media, Legal

Hedge Fund Partners vs Managed Account Investors

Today’s NYT (and Monday’s WSJ) each have articles which compare Madoff investors with those of recent $400 million dollar hedge fund fraud Bayou Group. I believe this misunderstands the applicable law of partnership, fraud, and investing. Hedge fund investors are limited partners, and as such, they have a fiduciary duty to their other partners. Regardless…Read More

Category: Hedge Funds, Legal, Regulation

Vast Under-Investment in Due Diligence

With everyone tsk-tsking the Madoff scandal — the amount lost, the after-the-fact obviousness, the SEC incompetence — I thought now was as  good a time as any to look at the actual research, due diligence and manpower thrown at investigating managers and funds. Not surprisingly, it is tiny — at least, when compared with the…Read More

Category: Bailouts, Hedge Funds, Investing, Legal, Regulation

SEC Under Fire; $50 Billion Fraud

Atkins was republican SEC commissioner from 2002 to 2008; Cox says SEC failed to act on allegations against Madoff; Investors lost up to $50 billion in Madoff’s alleged scheme; Analysis by Paul Atkins, Former SEC Commissioner

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The Madoff Scandal – Interview with Former SEC Chairman Arthur Levitt

Category: Legal, Regulation, Video

S.E.C. Chairmen, 2001-08

Here’s an excerpt from Bailout Nation, about a subject under much discussion today: The incompetence of the S.E.C.

Part IV: Market Failure
Chapter 14. Casting Blame

Over the course of two terms, Bush appointed three SEC Chairmen, each ill-suited for the position. It was a veritable parade of poor choices for the role of regulating stock markets. His first appointment, Harvey Pitt, was a securities industry defense attorney and was wholly unsuited to the position. Instead of representing the interests of investors, Pitt was an industry lapdog. Pitt pledged a “kinder and gentler” SEC just when the opposite was needed in the midst of a huge run of corporate misfeasance.

In an era of corporate accounting scandals, Pitt had close ties to the accounting industry. And for inexplicable reasons, Pitt met with the heads of companies under active SEC investigation. As a Wall Street lawyer, Pitt had “recommended that clients destroy sensitive documents before they could be used against them – advice that seemed to find echoes in the SEC’s investigations into Enron and its shredder-happy auditor, Arthur Andersen.” Pitt had to recuse himself from many of the SEC’s votes — they were frequently about the clients he had represented as a defense attorney. By July of 2002, Senator (and future GOP presidential candidate) John McCain was calling for Pitt’s resignation.

Pitt, not surprisingly, demoralized the agency. To investor advocacy groups, having Pitt as SEC chief was like putting Osama bin Laden in charge of Homeland Security.

The next SEC Chairman Bush appointed was William Donaldson. He is the one who allowed the net-cap rule to be exempted for the five biggest banks in 2004. Instead of 12 to 1 leverage, banks levered up 30 and even 40 to 1 after the waiver. It isn’t glib to say the financial meltdown was three times as bad as it might have been for Donaldson’s SEC agreeing to this waiver. It would be charitable to call his chairmanship undistinguished.

Read More

Category: Legal, Regulation

Why Do Fund of Funds Exist

Here’s a question for you: What is the actual purpose of FoF ? In theory, they are supposed to do the due diligence, the forensic accounting, the deep background checks that ordinary investors cannot. Then once they identify a group of funds they want to allocate capital too, they are supposed to run the asset…Read More

Category: Bailouts, Hedge Funds, Investing, Legal

Inside Look: Ponzi Scheme

Hedge Fund Regulation – More Perspective on Madoff’s Alleged $50 Billion Ponzi Scheme

Category: Legal, Video

Culprits of the Financial Crisis

Great graphic ! I won’t link to the very strange article it comes from (it violates my  “No linking to shite policy”)but I liked the graphic above.

Category: Bailouts, Digital Media, Humor, Legal

Bernie Madoff on the Modern Stock Market

Implicated in a $50 billion Ponzi scheme, at a 2007 roundtable discussion with Justin Fox, Ailsa Roell, Robert A. Schwartz, Muriel Seibert, and Josh Stampfli.

These are some excerpts featuring Madoff, recently implicated in a $50 billion Ponzi scheme.

The full video is here

Category: Legal, Regulation, Video