BERNARD LAWRENCE

Bernard Lawrence “Bernie” Madoff and the 50+ Billion Dollar Scam



Bernard Lawrence “Bernie” Madoff and the 50+ Billion Dollar Scam

Introduction

New York's Queens is the birth place of the Bernard Lawrence Madoff who was born there on 29th April, 1938. He attended the university of Alabama for a year and then got him transferred in 1960 to Hofstra University. He after his graduation started a firm on the Wall Street with the name of Bernard L. Madoff Investment Securities LLC and became chairman of the company. It started very small with only $37,000 (present day value) and grew due to help from Saul Alpern, his father in law and accountant. To compete with other firms on the New York Stock Exchange his firm used new computer information technology which is known today as the NASDAQ. The company acted as a third market provider which allowed the absence of exchange specialist firms in trades by executing orders over the counter from retail brokers. Madoff started the “legal kickback” which is when a broker receives payments from the dealer as a right to perform the order of the customer to influence how the broker routes client orders. Some viewed these payments as unethical business practice, but Bernie claimed they did not affect the customers outcome and they were apart of normal business practice. The success of the firm led to the Madoff making contributions to federal candidates, parties, and committees. They also had strong ties to the SIFMA (Securities Industry and Financial Markets Association) as Bernie's brother Peter served two terms as a member of the Board of Directors.

Discussion and Analysis

Concerns about the firm raised in 1999 when the Securities and Exchange Commission (SEC) was informed that mathematically, legally and logically it is not possible to offer the returns the firm claim ...