One Of The Biggest Fraud In History
The former chairman of the Nasdaq Stock Market and also the founder of Bernard L. Madoff Investment Securities LLC, Mr. Bernard Madoff has been arrested and charged on Thursday with allegedly running a $50 Billion 'Ponzi Scheme'. Analyst were heard as saying that, the fraud which has just been discovered can be ranked as one of the biggest Fraud Case Ever. The company Bernard L.Madoff Investment Securities LLC, was found in the early 1960's by Mr. Madoff himself, U.S. Prosecutors have termed it one of the biggest fraud which has been estimated losses worth $50 Billion.
Madoff was heard telling his senior employees of the firm that "It's all just one big lie". Though it was, as he was running a Ponzi Scheme, Ponzi Scheme is basically a swindle offering unusually high returns, with early investors paid off with money from later investors. A Lie being shown to the investor about such huge profits the firm is making.
On Thursday, two agents from the U.S. Federal Bureau Of Investigation entered Madoff's New York Apartment and arrested him. Mr. Madoff said,"There is no innocent explanation. It is all my fault........paid investors with money that wasn't there."
The fraud which is conducted by Mr. Madoff is to be ranked as one of the biggest frauds in history. This is the second fraud at such as huge scale, when in 2001, The Energy Trading Giant "Enron" had filed for bankruptcy. The Enron Fraud was known as the the Biggest Fraud in History ever made.
It has been known that the U.S. Prosecutors have charged Madoff, with a single count of securities fraud, and said that he would be facing 20 years in prison and a fine of $5 Million. Different firms were being seen filing separate civil charges against Madoff in which, The Securities and Exchange Commission was the first one to do so. "Our complaint alleges a stunning fraud, both in terms of scope and duration. We are moving quickly and decisively to stop the scheme and protect the remaining assets for investors", said Scott Friestad, the SEC's Deputy enforcer.
An investor in the hedge fund said that he generated consistent returns, which was part of the attraction. Since 2004, annual returns averaged around 8 percent and ranged from 7.3 percent to 9 percent, but last decade the returns were in the low-double digits. So what was actually the HEDGE FUND? The fund revealed that it followed a split strike conversion strategy, which entailed owning stock and buying and selling options to limit downside risk. Many people as well as other strategists had questioned how that strategy could generate those kinds of returns so consistently.
The Hedge-fund business was conducted on a separate floor from the market making business. It has even been said that Mr. Madoff had long kept the financial Statements of this fund under "Lock And Key".This fund had been running for long as the U.S. prosecutors say that its been running atleast since 2005. It has even been revealed that in the first week of Decemeber, Mr. Madoff had told a senior employee that the Hedge-Fund Clients had requested about $7 Billion of their money back, and he was struggling to pay them. Investors demanded their money back to reduce risk as the global economy weakened. This type of fraud has even encouraged investors to pull out money from other hedge funds which they have invested in.
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