very very interesting show on 60 minutes last evening.

http://www.cbsnews.com/stories/2009/02/27/60minutes/main4833667.shtml

He never figured out the scheme. He did see some anomalies that would result in returns that could be nowhere near the claimed 12% and he also saw a consistent return over many years which is basically impossible.

Unfortunately, his concerns fell on deaf ears.

When a man with money meets a man with experience,
The man with experience leaves with the money,
....while the man with the money leaves with experience.

T'was ever thus!

Larry Kudlow had a couple of guys on his show a few months ago talking about Madoff. Ken Langone was one of them iirc. He guest spoke of a meeting he had with Madoff in early November, before Thanksgiving, at Madoff's offices. It was the first time he met Madoff.

He's a very savvy Wall Street type, and he said he's glad he never played poker with the guy, because he'd have lost his shirt to Madoff. Madoff gave him the nickel tour of his offices and art work, etc.

The gist of the meeting was Madoff telling these two visitors (who were partners) about a new investment platform he was going to trot out and wanted them to get on board. Bernie told them they would be getting a better deal that his current invesors. The guest told Kudlow that right away that turned him off that he was offering a new guy a better deal. His partner was impressed and out on the street they spoke about it and the guest said let's think about it over the weekend. Partner flies to Chicago for the weekend, calls up the guest and says, you know, I think your'e right. Lets pass.

Of course, Madoff goes in the tank a couple of weeks later.
This guest saves his investors a ton of money by having some scruples and integrity and not chasing a buck.

Here is the text of the interview. Good read.

http://www.cnbc.com/id/28781675

'Frontline' did a nice job exploring the Madoff story a couple of weeks back:

http://www.pbs.org/wgbh/pages/frontline/madoff/view/

I didn't watch the video but I just read the article and this passage certainly stands out....



" "What I found out from my dealings with the SEC over eight and a half years is that their people are totally untrained in finance; they're unschooled; they're un-credentialed. Most of them are just merely lawyers without any financial industry experience," Markopolos said.

"Well, if the people there aren't trained in securities work, what are they trained in?" Kroft asked.

"How to look at pieces of paper that the securities laws require. They can check every piece of paper perfectly and find misdemeanors, and they'll miss all the financial felonies that are occurring because they never look there," Markopolos replied. "Even when pointed to fraud, they're incapable of finding fraud."

No one at the SEC would talk to 60 Minutes on the record about Markopolos' allegations. "

__________________
1982 300GD Carmine Red (DB3535) Cabriolet Parting Out
1990 300SEL Smoke Silver (Parting out)
1991 350SDL Blackberry Metallic (481)

"The thing is Bob, its not that I'm lazy...its that I just don't care."

Gee. An untrained lawyer. Whuda thunk it!

Seriously, you always have to step back from the trees (the paper shuffling) and look at the forest.
My forest: The fact that this guy rarely showed down years and consistently posted 12% returns year in and year out. Consistently beating EVERYONE. In other words, he's the best in the world.

That and the fact that his auditor was the only practicing accountant in a three person audit firm (including the secretary) located in a suburban shopping mall.

Red flags all over that one.

Nobody did their own due dilligence. Not investors, not his "auditor" and not the regulators. Lots of blame to go around.

Bernie was "ZZZZ BEST".......for a while. ...and nobody was watching.

http://www.youtube.com/watch?v=JydqCyFsmS8

http://www.youtube.com/watch?v=UXrZEVKTUrI&feature=related

Where did you read about the audit firm, i'd love to see that article.


Great videos. I'm still not 100% sold on people being able to totally change but at least they are now giving back to society rather then taking from it...reminds me of this movie...

http://en.wikipedia.org/wiki/Catch_Me_if_You_Can

( Too bad I haven't seen the entire thing.....)

__________________
1982 300GD Carmine Red (DB3535) Cabriolet Parting Out
1990 300SEL Smoke Silver (Parting out)
1991 350SDL Blackberry Metallic (481)

"The thing is Bob, its not that I'm lazy...its that I just don't care."

Articles were all over the place. Here's just one.

http://www.financialweek.com/apps/pbcs.dll/article?AID=/20081218/REG/812189991

Not only was he not doing any "audit procedures" for the money, he told the NY State CPA regulators and the AICPA that he didn't perform audits and thus was not subject to a higher level of professional "peer review".

http://www.journalofaccountancy.com/Web/20091553

Back around the time Sarbanes Oxley became law, I used to audit a small private broker dealer. It was an SEC audit of course, but way less in detail than those required of public entities. Then along came SOX ( Sarbanes Oxley) and the requirement for audit firms of private broker dealers to register with the SEC. They postponed implementing that requirement for a few years and the client eventually sold his business to someone else and works under that eneity. My partners and I would not have gone thru the SEC hoops for only 1 BD client.

Here's the takeaway for public companies:
Go to the SEC website and review their filings. Look at their audited financial statements filed there or on their own website.

Go to the AICPA website and look up the most recent peer review of the CPA firm. It's public record. Issuing audited financial statements and not having a peer review by another CPA firm can't happen. Truthfully, that is.

The part of that piece that really amazed me (I must have missed it when they first showed it some months back) was where he contacted all the major traders he knew at the Chicago board, and he claims to know most of them, and none of them had any recollection of trading with Madoff.

If the FCC was truly interested in looking at this guy, how hard would it have been to investigate the paper trail of his investments on behalf of his clients?

Mitt Romney and other Reaganites go on and on and on about cutting useless regulation. Fact is, regulation is way weak right now and has been for some time.

__________________
Te futueo et caballum tuum

1986 300SDL, 362K
1984 300D, 138K

I feel for those people who lost so much but you have to wonder about someone (like that one guy in the piece) who had an 8 figure family fortune and apparently had ALL of it with Madoff. If he'd had only half with him, still a large percentage to have in one basket, he wouldn't have been ruined, as the piece implies.

__________________
Te futueo et caballum tuum

1986 300SDL, 362K
1984 300D, 138K

http://www.cbsnews.com/htdocs/pdf/madoff_customer_list.pdf

Its pretty long....figure close to 10,000 people on that list being directly effected. I'm guessing the total figure of those effected is close to 250,000 if not more.

Even though i've been stiff beyond all comprehension i've never put 100% or into one thing. That is never a good idea under any circumstance.

__________________
1982 300GD Carmine Red (DB3535) Cabriolet Parting Out
1990 300SEL Smoke Silver (Parting out)
1991 350SDL Blackberry Metallic (481)

"The thing is Bob, its not that I'm lazy...its that I just don't care."

Holy cow, I have a financial advisor who's also named Madoff. I wonder if this is the same guy who holds my portfolio?

__________________
- Brian


1989 500SEL Euro
1966 250SE Cabriolet
1958 BMW Isetta 600

did anyone notice the piece about the feeder funds? as in Fairfield Greenwich who had advised their clients to invest with Madoff. Fairfield Greenwich is a 17 billion dollar hedge fund.....Fairfield Greenwich received BIG BUCKS in commissions from Madoff in exchange for referring clients to him. the lead dog for Fairfield Greenwich is now cooling his heels at his beach house trying to avoid the publicity......

http://seclaw.blogspot.com/2008/12/madoff-fairfield-connection.html

I like the way Markopolos put it when asked what it was those guys were supposed to do for their paycheck. Something like, 'they were supposed to ascertain if it was a good, legitimate investment or not and instead they got paid to lose their clients' money.'

__________________
Te futueo et caballum tuum

1986 300SDL, 362K
1984 300D, 138K

yes, and in most of these types of cases, one (Madoff) pays for the sins of the many. I can guarantee there are others equally culpable who will never be punished. case closed.