John Steel Gordon with the long view on Ponzi schemes.
Still, no one has the data on the longest running - biggest means nothing. (In fact, no one knows how long Madoff was running his, exactly. It may have been a regular fund for a while.)
Showing posts with label Serious Fraud. Show all posts
Showing posts with label Serious Fraud. Show all posts
Thursday, December 18, 2008
For the record ...
Tuesday, December 16, 2008
'Everything I had, I gave to Madoff'
Well, the stories are coming out.
Q: If someone with high liquid net worth comes to you and says, "here is all the money I have in the world", what do you do? Do you turn them away, in whole or in part?
Unless I intended to provide them with a significant diversification, I would, right? You?
Monday, December 15, 2008
The Good Life
Another fraud, who has the special joy of being ... out-done this week (and, therefore, out of sight?). Mr. Dreier.
As one bank-examiner noted long ago during the Milken junk-bond fiasco, "look for the bankers with the Italian shoes."
He has a triplex apartment on the East Side of Manhattan, along with a house near the beach in Southampton, N.Y., and a 120-foot yacht. The walls of his Park Avenue office drip with expensive modern art, and he kept three personal assistants busy.
He peddled false notes to eager hedge fund investors, among others, so says the NYT, to the tune of $113 million.
These things are fascinating, because they are so far beyond the realm of my constitution to even conceive of such a scheme. It's like looking at a different world - and I don't mean the yacht, etc.
Hyperbole Reins
Former SEC chair Breeden calls Madoff "gang" activity "speechless cruelty".
You'd think the guy committed genocide...
I can't help but think that the vehement furor over the SEC is a ploy to find ... deep pockets to pay back a bunch of silly investors.
Charity Redux
I am supposed to feel particularly sad for charity Boards who put large sums of money to work in loosely regulated "strategies", like Madoff?
Isn't there something inherently repugnant about people, very wealthy people, clamoring - clamoring - to "get in" on a money-management strategy that could be replicated by a computer?
How much more protection do you get from regulated entities, one wonders.. Do rules to follow, public filings, etc., show a meaningful reduction in fraud cases or size of fraud cases?
Friday, December 12, 2008
Invincible Wall Street, Part II
THERE IS NO BOOKEND FOR THIS TALE, JUST NEW CHAPTERS
- Citibank will pay $7 billion to settle the massive auction-rate securities debacle.
- Fidelitys' crew will settle Wall Street's version of pay-to-play (or plug-'n-play or whatever).
- Last, a fraud scheme so vast that the SEC called it "epic" and Ponzi himself would have either blushed or have had his proudest moment to date. Made possible by complete faith in a little audit group in the middle of nowhere and belied by returns so statistically improbable that Mendel would have grinned.
Madoff’s auditor, Friehling & Horowitz, operated from a 13-by-18-foot office in Rockland County, New York. Vos had an investigator stake out the office [!!! I missed that in due-diligence class]. A call to the New City, New York, office of Friehling & Horowitz after business hours wasn’t returned. (Bloomberg)
Update: CNBC is asking about fraudulent conveyance. I doubt there is such a thing for a fraud itself, right? That's like asking, "Was the fraud conducted fairly?" Who knows, though. It's just crazy enough to be possible...
Update2: split-strike is a fancy, modified buy-write strategy. They promise "daily liquidity".
Update3: Oh, what a list of investors. Every no-name auditor in the industry can expect the phone to be ringing off the hook in the next week.
Update4: Askia says that OEX options market couldn't handle $13 billion ... is that true? It does appear to be. Today's open interest of 188188 appears to suggest a size of just under $8 billion, far in excess of whatever the daily volume would be...
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