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Une firme de Wall Street s'écroule dans la plus grande fraude de l'histoire


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Je vous conseille de lire l'histoire, très intéressante !

 

 

http://www.bloomberg.com/apps/news?pid=20601087&sid=a3uKf5P1lFmg&refer=home

 

 

Madoff Confessed $50 Billion Fraud Before FBI Arrest (Update1)

 

 

By David Voreacos and David Glovin

 

Dec. 12 (Bloomberg) -- Bernard Madoff confessed to employees this week that his investment advisory business was “a giant Ponzi scheme” that cost clients $50 billion before two FBI agents showed up yesterday morning at his Manhattan apartment.

 

“We’re here to find out if there’s an innocent explanation,” Agent Theodore Cacioppi told Madoff, who founded Bernard L. Madoff Investment Securities LLC and was the former head of the Securities Industry Association’s trading committee.

 

“There is no innocent explanation,” Madoff, 70, told the agents, saying he traded and lost money for institutional clients. He said he “paid investors with money that wasn’t there” and expected to go to jail. With that, agents arrested Madoff, according to an FBI complaint.

 

The 8:30 a.m. arrest capped the downfall of Madoff and businesses bearing his name that specialized in trading securities, making markets, and advising wealthy clients. Many questions remain unanswered, including whether Madoff’s clients actually lost $50 billion. The complaint and a civil lawsuit by regulators describe a man spinning out of control.

 

Madoff appeared in federal court in Manhattan at 6 p.m., wearing a white-striped shirt and dark-colored pants. U.S. Magistrate Judge Douglas Eaton described the securities-fraud charge against him and set a $10 million bond at a hearing where Madoff said nothing. Madoff later posted the bond, secured by his apartment and guaranteed by his wife.

 

Hedge Funds, Banks

 

Madoff’s firm had about $17.1 billion in assets under management as of Nov. 17, according to NASD records. At least half of its clients were hedge funds, and others included banks and wealthy individuals, according to the records.

 

The firm was the 23rd-largest market maker on Nasdaq in October, handling an average of about 50 million shares a day, exchange data show. It took orders from online brokers for some of the largest U.S. companies, including General Electric Co. and Citigroup Inc.

 

Prosecutors joined the Securities and Exchange Commission, which filed a civil lawsuit, in scrambling to unravel the collapse of Madoff’s Investment Securities business. The broker-dealer and investment adviser was housed in a lipstick-shaped building at 885 Third Ave.

 

A rapid series of events in early December preceded the firm’s demise, according to the arrest complaint and SEC lawsuit.

 

In the first week of December, Madoff told a worker identified as Senior Employee No. 2 that clients had requested $7 billion in redemptions, he was struggling to find liquidity, and he thought he could do so, according to the FBI and SEC.

 

‘Under Great Stress’

 

Senior employees “previously understood” that the investment advisory business managed between $8 billion and $15 billion in assets, according to the documents.

 

On Dec. 9, Madoff told a colleague identified as Senior Employee No. 1 that he wanted to pay bonuses in December, or two months earlier than usual. The next day, Madoff got a visit at his offices from the employees. They said he appeared “under great stress” in prior weeks, according to the documents.

 

Madoff told the visitors that “he had recently made profits through business operations, and that now was a good time to distribute it,” according to the FBI complaint.

 

When the workers challenged that explanation, Madoff said he “wasn’t sure he would be able to hold it together” at the office and preferred to meet at his apartment, Senior Employee No. 2 told investigators. He ran his investment advisory business from a separate floor of his firm’s offices, keeping financial statements “under lock and key,” prosecutors said.

 

‘One Big Lie’

 

At his apartment, Madoff told the employees that his investment advisory business was a “fraud” and he was “finished,” according to the FBI complaint.

 

He said he had “absolutely nothing,” that “it’s all just one big lie,” and that it was “basically, a giant Ponzi scheme,” Agent Cacioppi wrote in the complaint. The senior employees understood Madoff to be saying he had paid investors for years out of principal from other investors, the agent wrote.

 

The business had been insolvent for years, said Madoff, who then estimated losses at more than $50 billion. Madoff said he had $200 million to $300 million left, and he planned to pay employees, family, and friends.

 

Madoff, who had also confessed to a third senior employee, said he planned to surrender to authorities within a week, according to the complaint.

 

Cacioppi and another agent beat Madoff to the punch.

 

After saying he had no “innocent explanation,” Madoff confessed “it was all his fault,” Cacioppi wrote.

 

‘Broke,’ ‘Insolvent’

 

“Madoff also said that he was ‘broke’ and ‘insolvent’ and that he had decided that ‘it could not go on,’ and that he expected to go to jail,” the agent wrote. “Madoff also stated that he had recently admitted what he had done to Senior Employee Nos. 1, 2, and 3.”

 

Madoff founded the firm in 1960 after leaving law school at Hofstra University in Hempstead, New York, according to the company’s Web site. His brother, Peter, joined the firm in 1970 after graduating from law school, it said.

 

Madoff, who owned more than 75 percent of his firm, and his brother Peter, are the only two listed on regulatory records as “direct owners and executive officers.”

 

Madoff was influential with the Nasdaq Stock Market, serving as chairman of the board of directors, according to the FBI complaint.

 

He was chief of the Securities Industry Association’s trading committee in the 1990s and earlier this decade. He represented brokerages in talks with regulators about new stock-market rules as electronic-trading systems and networks grew.

 

Madoff, who founded his firm in 1960, won an assignment to manage a $450,000 stock offering for A.L.S. Steel Corp. of Corona, New York, two years later, according to an SEC news digest.

 

He was an early advocate for electronic trading, joining roundtable discussions with SEC regulators considering trading stocks in penny increments. His firm was among the first to make markets in New York Stock Exchange listed stocks outside of the Big Board, relying instead on Nasdaq.

 

Madoff’s Web site advertises the “high ethical standards” of his firm.

 

“In an era of faceless organizations owned by other equally faceless organizations, Bernard L. Madoff Investment Securities LLC harks back to an earlier era in the financial world: The owner’s name is on the door. Clients know that Bernard Madoff has a personal interest in maintaining the unblemished record of value, fair-dealing, and high ethical standards that has always been the firm’s hallmark.”

 

The case is U.S. v. Madoff, 08-MAG-02735, U.S. District Court for the Southern District of New York (Manhattan).

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et les perdants vont perdre beaucoup!!!!

 

-- Hedge funds, already heading for their worst year on record, may lose at least $10 billion from investing with a New York firm that founder Bernard L. Madoff called “a giant Ponzi scheme.”

 

The biggest loser may be Walter Noel’s Fairfield Greenwich Group, whose $7.3 billion Fairfield Sentry Ltd. invested with Madoff’s eponymous firm, three people familiar with the matter said. Another client was Kingate Management Ltd., whose $2.8 billion Kingate Global Fund Ltd. invested with Madoff, they said.

 

Investors, ranging from hedge funds that depend on outside managers to wealthy individuals, entrusted their money with the 70-year-old Madoff, who told employees before his arrest yesterday that his firm was “one big lie” and may have cost clients as much as $50 billion. His confession comes with hedge fund assets poised to fall as low as $1.1 trillion by Jan. 1 from $1.9 trillion in June, reflecting market losses and customer redemptions, analysts at Morgan Stanley estimate.

 

“If the losses were $50 billion or even half that amount, it would be the biggest Ponzi scheme in history,” said Mark Schonfeld, the former head of the U.S. Securities and Exchange Commission’s New York office, who is now a partner at Gibson Dunn & Crutcher LLP.

 

Fairfield spokesman Andrew Ludwig declined to comment. A call to the Bermuda-based office of Kingate wasn’t returned. Madoff, whose New York-based firm was the 23rd largest market maker on Nasdaq in October, faces as much as 20 years in prison and a $5 million fine if convicted.

 

‘Black Eye’

 

“Bernard Madoff is a longstanding leader in the financial services industry,” said defense lawyer Dan Horwitz. “We will fight to get through this unfortunate set of events. He’s a person of integrity.”

 

The fraud is “a black eye to an industry that doesn’t need one,” said Bill Grayson, president of San Francisco-based investment firm Falcon Point Capital LLC.

 

Fairfield Sentry has a record of more than 15 years with an annual return of 4 to 6 percentage points above benchmark interest rates, according to a marketing document dated this month that was prepared by Zurich-based NPB New Private Bank Ltd. On an absolute basis, returns exceeded 10 percent every year from 1991 through 2000. Since then, they ranged from 6.4 percent to 9.8 percent.

 

The strategy is a “split-strike conversion,” where the investment manager buys shares of large U.S. companies and enters into options contracts to limit the risk, the document says.

 

Fix Asset Management

 

Another client was Fix Asset Management, which had an account worth at least $400 million with Madoff Investments. The firm said it’s checking with lawyers about the holdings.

 

“We are very shocked,” John Fix, the son of founder Charles Fix, said by phone from Greece. “We put in redemptions in the past few months and got our money back no problem. We are just so surprised about all this.”

 

Madoff, who founded his firm in 1960, won an assignment to manage a $450,000 stock offering for A.L.S. Steel Corp. of Corona, New York, two years later, according to an SEC news digest.

 

He ran his investment advisory business from a separate floor of his firm’s office, keeping financial statements “under lock and key,” prosecutors said. Early in December, he told one employee that clients wanted to redeem about $7 billion and that he was struggling to free up the funds, the government said.

 

‘Blind Eye’

 

Not every potential Madoff investor was fooled. Jim Vos, who runs due diligence firm Aksia LLC, said he spent several months probing Madoff’s firm on behalf of clients, only to recommend against investing in it. Vos said eight “feeder funds” invested about $15 billion with Madoff. Vos declined to name the clients.

 

Among the red flags, Vos said: 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. A call to the New City, New York, office of Friehling & Horowitz after business hours wasn’t returned.

 

“I’m shocked by how investors turned a blind eye to returns that were too good to be true, constant steady small positive monthly returns,” Vos said. “When something is too good to be true, it probably is.”

 

Individual investors are also worried. A 68-year-old New York woman, who declined to be identified, said she and her 73- year-old husband invested about $12 million with Madoff. Her husband’s former law partner had met him at a country club on Long Island, she said.

 

Frequent Trader

 

Madoff bought and sold stocks frequently, she said, as reflected in trading-account statements running over six pages. Although she said she has four residences, including one on Manhattan’s Upper East Side, she fears the couple’s entire savings are gone except for $60,000 in a bank account.

 

Since 2000, Madoff has donated at least $100,000 to the Democratic Senatorial Campaign Committee and more than $23,000 to the party’s candidates, including New York Senator Charles Schumer and New Jersey Senator Frank Lautenberg, according to the Center for Responsive Politics.

 

When markets are rising, schemes like this can be hard to detect “because the money’s flowing in,” said Schonfeld. “But when the market declines, people want their money back, and the whole thing collapses.”

 

Joyce Z. Greenberg, a retired financial advisor in Houston, said her late husband, entrepreneur Jacob Greenberg, first invested with Madoff in 1987. While declining to disclose the size of the account, she said it increased 10-fold in 21 years, according to Madoff’s monthly statements, and never had a losing year.

 

“He had trading authority,” she said. “I never questioned anything he did because I felt he was doing a good job. I figured everything was on the up-and-up.”

 

Greenberg said she felt “disbelief” upon reading news reports about Madoff.

 

“This feels like a nightmare,” she said. “I’m just grateful that I didn’t have all my eggs in one basket.”

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Source: Radiocanada.ca

 

Bernard Madoff, libéré contre une caution de 10 millions $ US, a été inculpé jeudi pour avoir organisé une fraude géante en passant par sa société de conseil en investissements. La méthode? Un « montage Ponzi », structure pyramidale où les investisseurs arrivés en premier sont rémunérés avec l'argent versé par les investisseurs les plus récents, avec promesse de rendements anormalement élevés.

 

Il fraude pour 50 milliards et on lui demande 10 millions pour retrouver sa liberté? God Bless America.

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Source: Radiocanada.ca

 

Bernard Madoff, libéré contre une caution de 10 millions $ US, a été inculpé jeudi pour avoir organisé une fraude géante en passant par sa société de conseil en investissements. La méthode? Un « montage Ponzi », structure pyramidale où les investisseurs arrivés en premier sont rémunérés avec l'argent versé par les investisseurs les plus récents, avec promesse de rendements anormalement élevés.

 

Il fraude pour 50 milliards et on lui demande 10 millions pour retrouver sa liberté? God Bless America.

 

Libere en attente de proces.

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