Investors scrambled to assess potential losses from an alleged $50 billion fraud by Bernard Madoff, a day after the arrest of the prominent Wall Street trader.
(snip)
Federal agents arrested Madoff at his apartment on Thursday after prosecutors said he told senior employees that his money management operations were "all just one big lie" and "basically, a giant Ponzi scheme."
Wow. I though I'd seen it all after Enron. The alleged perp was a longtime Wall Street titan, a market-maker - someone exchange officials trust to regulate trades in key stocks and provide liquidity backstops in extreme trading sessions. The alleged victims are all well-heeled, savvy, ridiculously prominent people. And they were taken for a ride all the way to the poorhouse:
Those investors were scrambling Friday to learn whether they had been wiped out by what prosecutors described as a multibillion-dollar Ponzi scheme. The assets of Madoff's investment company were frozen Friday in a deal with federal regulators and a receiver was appointed to manage the firm's financial affairs.
These two articles provide some clues to the potential moral of this story. Madoff's trades were untraceable, his record unauditable, and his investment strategy indecipherable. All of these things should be red flags, but sometimes friendship overpowers good judgment.
The tragedy in this story, if it plays out to its denouement, is that a lot of prominent families in Palm Beach and NYC will no longer be prominent. No more opera box seats, legacy admittees to the Seven Sisters, or mentions in society columns can be a tough road to hoe.
