"Beowulf Farukstein" wrote in message
...
This is why we need MORE de-regulation. If it weren't for the current
burdensome rules & regulations, we wouldn't see problems like this.

Now *there's* a clever idea. If a little Permethrin makes your skin fall off
but doesn't get rid of the head lice, try filling your tub with it and
soaking there for a while. You first, OK?

And what do we need to get rid of top-posters? Dynamite?

--
Ed Huntress


Too_Many_Tools wrote:
Just amazing.

And where was the SEC under Bush at this time?

TMT



Madoff's fund may not have made a single trade
By Jason Szep Jason Szep Fri Jan 16, 6:55 am ET
BOSTON (Reuters) – Bernie Madoff's investment fund may never have
executed a single trade, industry officials say, suggesting detailed
statements mailed to investors each month may have been an elaborate
mirage in a $50 billion fraud.

An industry-run regulator for brokerage firms said on Thursday there
was no record of Madoff's investment fund placing trades through his
brokerage operation.

That means Madoff either placed trades through other brokerage firms,
a move industry officials consider unlikely, or he was not executing
trades at all.

"Our exams showed no evidence of trading on behalf of the investment
advisor, no evidence of any customer statements being generated by the
broker-dealer," said Herb Perone, spokesman for the Financial Industry
Regulatory Authority.

Madoff's broker-dealer operation, Bernard L. Madoff Investment
Securities, underwent routine examinations by FINRA and its
predecessor, the National Association of Securities Dealers, every two
years since it opened in 1960, Perone said.

Madoff, a former chairman of the Nasdaq Stock Market who was a force
on Wall Street for nearly 50 years, allegedly confessed to his sons
the firm's investment-advisory business was "basically a giant Ponzi
scheme" and "one big lie," according to court documents.

He estimated losses of at least $50 billion from the Ponzi scheme,
which uses money from new investors to pay distributions and
redemptions to existing investors. Such schemes typically collapse
when new funds dry up.

Each month, Madoff sent out elaborate statements of trades conducted
by his broker-dealer. Last November, for example, he issued a
statement to one investor showing he bought shares of Merck & Co Inc,
Microsoft Corp, Exxon Mobil Corp and Amgen Inc among others.

It also showed transactions in Fidelity Investments' Spartan Fund. But
Fidelity, the world's biggest mutual fund company, has no record of
Madoff or his company making any investments in its funds.

DISCREPANCIES

"We are not aware of any investments by Madoff in our funds on behalf
of his clients," Fidelity spokeswoman Anne Crowley said in an e-mail
to Reuters.

Neither Madoff nor his firm was a client of Fidelity's Institutional
Wealth Services business, their clearing firm National Financial or a
financial intermediary client of its institutional services arm, she
said.

"Consequently, his firm did not work with our intermediary businesses
through which firms invest their clients' money in Fidelity funds,"
she added.

There also appear to be discrepancies between monthly statements sent
to investors and the actual prices at which the stocks traded on Wall
Street.

For example, his November statement showed he bought software maker
Apple Inc's securities at $100.78 each on November 12, about a month
before his arrest.

But Apple's stock on that day never traded above $93.24. The statement
also showed he bought chip maker Intel Corp at $14.51 on November 12,
but Intel's highest price on that day was $13.97.

"You could print up any statements you want on the computer and send
it out to a client and the chances are the client wouldn't know,
because they are getting a statement," said Neil Hackman, president
and chief executive of Oak Financial Group, a Stamford, Connecticut-
based investment advisory firm.

To some, the numbers did not add up.

About 10 years ago, Harry Markopolos, then chief investment officer at
Rampart Investment Management Co in Boston, asked risk management
consultant Daniel diBartolomeo to run Madoff's numbers after
Markopolos tried to emulate Madoff's strategy.

DiBartolomeo ran regression analyses and various calculations, but
failed to reconcile them. For a decade, Markopolos raised the issue
with the U.S. Securities and Exchange Commission, which has come under
fire in Congress in recent weeks for failing to act on Markopolos's
warnings.

(Additional reporting by Muralikumar Anantharaman; Editing by Andre
Grenon)