Madoff Fraud Hits Investors Worldwide
By Andrew Jeffery Dec 15, 2008 3:45 pm
Losses mount as details of $50 billion scheme emerge.
This morning in Europe, Spain’s Grupo Santander and France’s BNP Paribas announced clients and shareholders may be out billions of dollars, according to the Wall Street Journal. In Japan, Nomura Holdings (NMR) admitted to losses of as much as $302 million.
Back in the US, the Associated Press is reporting that Goldman Sachs (GS) and money manager BlackRock (BLK) are claiming no exposure. Bank of America (BAC), Citigroup (C) and Merrill Lynch (MER) declined to comment.
Meanwhile, well-known individuals ranging from movie director Steven Spielberg to Nobel laureate Elie Wiesel are likewise seeing their investments evaporate. Spielberg’s Wunderkind Foundation, according to regulatory filings, had a sizable portion of its assets with Madoff as recently as 2006. Wiesel’s Foundation for Humanity was one of a host of Jewish charities said to be tallying up losses.
The $50 billion fraud is even wiping out certain funds of funds. Funds of funds invest money in hedge funds on behalf of their high net-worth clients; losses at once such fund, Maxam Capital Management, appear significant enough to have forced it to close up shop.
Stories are emerging about investors who acted as unofficial sales agents for Madoff’s fund. Many were dependent on the income for their retirement. The Journal cites one such case, in which a Boca Raton, Florida resident, a former securities analyst, brought in dozens of new clients without ever soliciting a single one; instead, people would come to him and ask how they too could receive what seemed like guaranteed income.
Madoff managed to generate consistent returns for years, appearing impervious to market ups and downs. And while many questioned the validity of his performance, evidence of any wrongdoing couldn't be found.
As the investment community beings to fully grasp the implications of the fraud -- the biggest in the history of Wall Street, easily dwarfing the infamous schemes of Enron and WorldCom -- it’s unclear just how shaken investor confidence in opaque investment vehicles now is.
During a time when money managers are desperately trying to assure clients they can navigate highly volatile markets, the Madoff debacle certainly isn't going to help their cause.
No positions in stocks mentioned.
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Reply
2008-12-15 16:05:21
Trickle me down
The unfortunate event to me is another indication that "trickle down" doesn't really work. Part of the assumption of "trickle down" is that the wealthy are better stewards of money and investment.
As recent history has shown us, wealthy people are just as likely to cheat and trick other wealthy people out of their money.
A little regulation is a good thing, as it is far easier to generate profits through trickery and deceit than thru the creation of real value. The creation of real value is hard, hard work.
And I love Paulson and his other bald headed friend (Dr. Evil Jr). One must give credit to Paulson for being bold. But now we find that bailout money that is going through AIG went to pay dividends and executive bonuses, and not to start lending. The banks simply are taking care of themselves first. No big surprise. This is natural. Another reason why some regulation and monitoring is required.
I just wish I could get in on this gravy train, at the expense of the taxpayer. And even more fun is going to be if banks don't lend, we all will lose more money as the economy falters.
Seems to me that the rising tide lifts all boats, and the falling tide strands all ships. That included yachts.
As recent history has shown us, wealthy people are just as likely to cheat and trick other wealthy people out of their money.
A little regulation is a good thing, as it is far easier to generate profits through trickery and deceit than thru the creation of real value. The creation of real value is hard, hard work.
And I love Paulson and his other bald headed friend (Dr. Evil Jr). One must give credit to Paulson for being bold. But now we find that bailout money that is going through AIG went to pay dividends and executive bonuses, and not to start lending. The banks simply are taking care of themselves first. No big surprise. This is natural. Another reason why some regulation and monitoring is required.
I just wish I could get in on this gravy train, at the expense of the taxpayer. And even more fun is going to be if banks don't lend, we all will lose more money as the economy falters.
Seems to me that the rising tide lifts all boats, and the falling tide strands all ships. That included yachts.
2008-12-15 16:11:14
Dr. Evils
Nothing against bald guys. Just ones who actually are surprised that banks are hoarding the cash and giving taxpayer money out as dividends, without any rules or oversight.
It's real "Dr. Evil" stuff. "I'm holding the World ransom for $1 billion dollars! (But Dr. Evil in todays money that is not much). O.K. I'm holding the World ransom for $1 Trillion dollars" Right out of the movies.
It's real "Dr. Evil" stuff. "I'm holding the World ransom for $1 billion dollars! (But Dr. Evil in todays money that is not much). O.K. I'm holding the World ransom for $1 Trillion dollars" Right out of the movies.
2008-12-15 16:14:08
Chump change
It's 1 million, and 100 billion dollars. Chump change
http://www.youtube.com/watch?v=jTmXHvGZiSY
http://www.youtube.com/watch?v=jTmXHvGZiSY
2008-12-15 16:27:00
Correct link
http://www.youtube.com/watch?v=jTmXHvGZiSY
Austin Powers - 100 billion dollars
Austin Powers - 100 billion dollars
2008-12-15 16:29:52
Li nk
Delete the spaces, inserted automatically by the website
It should be ...vGZiSY
Enough humor, got to make real money. And Jenny says, "let it go"
It should be ...vGZiSY
Enough humor, got to make real money. And Jenny says, "let it go"
2008-12-15 17:02:06
The Wiemar Republic...
.....wheel barrows of cash for a loaf of bread..........that's the ultimate result of untold trillions doled out and unaccounted for.
I pay my taxes, gripe about it all year....and then this: CitiGroup gets multiple billions from the taxpayer and a)pays 400 million for "naming rights" to a ball stadium i will never attend and b)loans Dubai 8 billion because, as their spokesperson states, "...they are a good credit".
I give up.
I pay my taxes, gripe about it all year....and then this: CitiGroup gets multiple billions from the taxpayer and a)pays 400 million for "naming rights" to a ball stadium i will never attend and b)loans Dubai 8 billion because, as their spokesperson states, "...they are a good credit".
I give up.
2008-12-15 17:06:27
Chump change in feit dollars
We have the regulation but no enforcement. Even before Sarbanes Oxley the Regulations were sufficiant but again no enforcement. And even when there was enforcement it was toothless to the point it was like everyone was playing Monopoly and so they just picked up a go past jail pass as they got caught. Harvey Pitt passed them out like candy during his tenure.
JPM
JPM
2008-12-15 17:20:09
Ponzi
I can't see where Madoff did anything wrong. Considering we have the Social Security ponzi scheme, the 401(k) ponzi scheme, the real estate ponzi scheme, and the federal deficit ponzi scheme, what's one more?
2008-12-15 17:56:37
Ponzi
You forgot the grossly overpaid Doctor, Lawyer, Professional Ponzi scheme.
2008-12-15 18:00:15
Seriously now
I forgot to throw in Sports geek ponzi in there.
I'm just a piker, but it always struck my that many people in the world are grossly overpaid for what they produce.
Could it be that what we are really seeing in the markets is the payback for decades of overpayment (well beyond any real value produced) to vast segments of society?
Just a theory.
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