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The revelation that Bernard Madoff — who himself had in the past served as an adviser to the SEC on electronic trading — was running an alleged "$50 billion ponzi scheme" has rocked the SEC to its core, according to a current long-serving member of the commission’s enforcement division.
"This has put the agency into a state of complete panic," the SECer told TPMmuckraker in an interview.
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| By: Ari Sunday December 21, 2008 1:58 pm | |
1 Comment
I wonder who were the beneficieries of this Ponzi scheme over the decades. The basic framework of the Ponzi is that those investors that get in early actually get the great returns of the later, secondary, investors…who then “talk it up” and get tertiary investors involved. And so on. All through the years many of these investors likely were getting residuals…some that may have exceeded their initial investments.
Clearly the most recent investors were given “Le Screw Royale”…but I suspect many of the others may have made out quite well. In fact, perhaps many of the charities and other investors that have been mentioned in the media. In fact, if the main source of fund generation and increase was not in the markets, per se, but in recruitment of new marks, the actual losses should not be tied closely to the markets downturn at all. There wouldn’t be losses tied up in actual investment firms. The major impact of the downturn of Wall Street would mainly be reduced investor confidence and money that they would shift into his bogus “portfolio”.
So until a major audit is performed many of the real losers are likely unknown…even if the investors rolled-over their “money”…it was “monopoly money”. In fact, some of them may have to give up some of their “ill-gotten gains” to those that jumped into the scheme late.