Bernie Madoff Theory

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The Story of Bernie Madoff and the Securities and Exchange Commission Ponzi schemes are a continuing problem in the investment world and can only be stopped if the Securities and Exchange Commission does better safe guarding investors’ money. This paper will address Bernie Madoff’s Ponzi scheme and how he was able to steal billions of dollars from investors. The reasons why the SEC responded so slowly to Bernie Madoff’s Ponzi scheme, and what can be done in the future to make sure another Ponzi scheme of this magnitude does not happen again. Also included in this paper will be examples of good and bad leadership theories.
Ponzi Scheme Bernie Madoff conducted one of the largest Ponzi schemes in the history of the United States. …show more content…

He pointed out that BMIS reported only seven small monthly losses in 174 months (14.5 years) (Shafritz, Russell, Borick 2013). The SEC failed to act on any of his information. Markopolis said that he “gift wrapped and delivered the largest Ponzi scheme in history to them and somehow they couldn’t be bothered to conduct a thorough and proper investigation because they were too busy on matters of higher priority (Shafritz, Russell, Borick pg.350).” During subcommittee hearings, claims were made that the SEC is too close to big players in the financial world, causing a fog within the commission. The SEC responded slowly to tips about Madoff’s Ponzi scheme because they did not have the right employees in place. The SEC has relied more on a group of young attorneys and lifelong government employees to do its business (Shafritz, Russell, and Borick, 2013). In the end, Bernie Madoff could not keep up with all his lies when the economy went bad. He turned himself before anybody in the SEC had started an investigation into his Ponzi scheme. Markopolis stated in a 60 minutes interview, “That’s typically how the SEC does it. They come in after the crime has been committed, they toe tag the victims, count the bodies, and try to figure out who the crooks were, after the fact, which does none of us any good (60 minutes interview).
After the Bernie Madoff scheme, the SEC made changes to their enforcement Division to ensure that it focuses on cases that will have a significant impact. The agency has updated the way they handle tips and complaints, tracking and analyzing all the information that comes into their possession. The agency is working on a future system to apply data analytics to their information so the agency can be more proactive in detecting fraud (The Securities and Exchange Commission Post-Madoff

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