Bernie Madoff's investment fund may never have executed a single trade, industry officials say, suggesting detailed statements mailed to investors each month may have been an elaborate mirage in a $50 billion fraud.
| He was running that thing for the past umpty years, handling money by the bucket, and nobody noticed he wasn't trading? |
Enron maintained a fake trading floor at its Houston HQ. Ran it long time. Had the employees in the building take shifts there. Then they'd run potential investors through on a tour and show them the 'busy trading floor'. It was all fake.
And how many people in the building knew it was fake? How about, all of them. That's why I never felt bad that the Enron people lost their pensions. They knew their company was a scam.
Ditto Madoff's people at his 'brokerage house'. How many people there knew that there was no active trading? How about, all of them. |
| I knew some of the people on the operations end of Enron (pipelines & automation). They were straight up, not at HQ and got hurt badly without having had a clue about the scams, unfortunately. |
An industry-run regulator for brokerage firms said on Thursday there was no record of Madoff's investment fund placing trades through his brokerage operation. That means Madoff either placed trades through other brokerage firms, a move industry officials consider unlikely, or he was not executing trades at all.
"Our exams showed no evidence of trading on behalf of the investment advisor, no evidence of any customer statements being generated by the broker-dealer," said Herb Perone, spokesman for the Financial Industry Regulatory Authority.
Madoff's broker-dealer operation, Bernard L. Madoff Investment Securities, underwent routine examinations by FINRA and its predecessor, the National Association of Securities Dealers, every two years since it opened in 1960, Perone said.
Madoff, a former chairman of the Nasdaq Stock Market who was a force on Wall Street for nearly 50 years, allegedly confessed to his sons the firm's investment-advisory business was "basically a giant Ponzi scheme" and "one big lie," according to court documents.
He estimated losses of at least $50 billion from the Ponzi scheme, which uses money from new investors to pay distributions and redemptions to existing investors. Such schemes typically collapse when new funds dry up.
Each month, Madoff sent out elaborate statements of trades conducted by his broker-dealer. Last November, for example, he issued a statement to one investor showing he bought shares of Merck & Co Inc, Microsoft Corp, Exxon Mobil Corp and Amgen Inc among others. It also showed transactions in Fidelity Investments' Spartan Fund. But Fidelity, the world's biggest mutual fund company, has no record of Madoff or his company making any investments in its funds. 
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