Scam Madoff: detailed
We all heard the news about the giant scam that the guru of the stock market, NASDAQ founder Bernard Madoff (Bernard Madoff) turned over, deceiving investors from around the world for about $ 50 billion (this amount, together with virtual interest, that is, in fact, much less money and they all disappeared). This is the largest in the history of this type of scam.
Briefly well-known facts. Madoff was one of the founders of the NASDAQ stock exchange and its president, his brokerage firm has been operating since the 1960s. After leaving NASDAQ, he began to use his authority to raise money in the usual Ponzi pyramid, which he disguised as a hedge fund .
And now something that they don’t talk about on TV. Three days ago, Wall Street Journal journalists managed to get and publish one important document ( PDF ). This is a complaint to the SEC from 2005. That's right there, on 19 pages, like nowhere better analyzed the scheme, which was organized by Madoff.
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Giant scam became possible due to four factors.
1. Impeccable reputation, authority and enormous influence of Madoff. He raised such money that at some time he generated up to 20% of all transactions on the American stock market! Many years ago, he was one of the first to use computers for analysis and trading, and then became one of the founders of the NASDAQ. Many people believed that no one in the world knows better than him how the stock market works. He was an absolute authority, including in the Jewish diaspora (see clause 3).
2. Secrecy. Madoff's “Hedge Fund” very skillfully disguised his deals, and published his investment strategy only in general terms. Madoff asked all investors to talk as little as possible about the activities of the fund. Precisely because of this, the weakness of his investment strategy was not obvious to everyone, although experts had long suspected this (see the document at the link above), but they could not bring Madoff to clean water due to the reason from paragraph 1.
3. Jewish diaspora. It is among them that Madoff was looking for new investors - this is both billionaire private individuals, and presidents of venture funds, and directors of the world's largest banks. Most of them, as is known, are Jews. In this diaspora, traditionally an increased level of trust and they are accustomed to invest in each other’s projects. Very well the Jewish essence of the Madoff scam is covered in this WSJ article .
4. Relatively small dividends. Madoff has been paying depositors an average of 12% per annum for decades. There have never been any problems with interest payments. Profitability by months for 1990-2005 shown in the table. As you can see, only seven months, the yield was negative. For the stock market, this is simply a fantastic result.
Madoff consistently paid interest. Many investors were afraid to take the entire amount of the deposit, because they feared that Madoff would not accept the deposit back. He had a line of people willing to invest in his fund. He refused very many who literally begged him to take the money. If it were not for the global liquidity crisis, the firm would have existed for a very long time. Perhaps dozens of years.
By the way, in the near future, legislation should appear in Russia that will prepare the ground for the emergence of hedge funds (for more details, in this study ). So far we have the creation of such closed investment schemes is impossible, which is very distressing for many investors.
Briefly well-known facts. Madoff was one of the founders of the NASDAQ stock exchange and its president, his brokerage firm has been operating since the 1960s. After leaving NASDAQ, he began to use his authority to raise money in the usual Ponzi pyramid, which he disguised as a hedge fund .
And now something that they don’t talk about on TV. Three days ago, Wall Street Journal journalists managed to get and publish one important document ( PDF ). This is a complaint to the SEC from 2005. That's right there, on 19 pages, like nowhere better analyzed the scheme, which was organized by Madoff.
')
Giant scam became possible due to four factors.
1. Impeccable reputation, authority and enormous influence of Madoff. He raised such money that at some time he generated up to 20% of all transactions on the American stock market! Many years ago, he was one of the first to use computers for analysis and trading, and then became one of the founders of the NASDAQ. Many people believed that no one in the world knows better than him how the stock market works. He was an absolute authority, including in the Jewish diaspora (see clause 3).
2. Secrecy. Madoff's “Hedge Fund” very skillfully disguised his deals, and published his investment strategy only in general terms. Madoff asked all investors to talk as little as possible about the activities of the fund. Precisely because of this, the weakness of his investment strategy was not obvious to everyone, although experts had long suspected this (see the document at the link above), but they could not bring Madoff to clean water due to the reason from paragraph 1.
3. Jewish diaspora. It is among them that Madoff was looking for new investors - this is both billionaire private individuals, and presidents of venture funds, and directors of the world's largest banks. Most of them, as is known, are Jews. In this diaspora, traditionally an increased level of trust and they are accustomed to invest in each other’s projects. Very well the Jewish essence of the Madoff scam is covered in this WSJ article .
4. Relatively small dividends. Madoff has been paying depositors an average of 12% per annum for decades. There have never been any problems with interest payments. Profitability by months for 1990-2005 shown in the table. As you can see, only seven months, the yield was negative. For the stock market, this is simply a fantastic result.
Madoff consistently paid interest. Many investors were afraid to take the entire amount of the deposit, because they feared that Madoff would not accept the deposit back. He had a line of people willing to invest in his fund. He refused very many who literally begged him to take the money. If it were not for the global liquidity crisis, the firm would have existed for a very long time. Perhaps dozens of years.
By the way, in the near future, legislation should appear in Russia that will prepare the ground for the emergence of hedge funds (for more details, in this study ). So far we have the creation of such closed investment schemes is impossible, which is very distressing for many investors.
Source: https://habr.com/ru/post/47788/
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