A History Of The Fraud - 3367 Words

A History of the Fraud Bernie Madoff had his start on Wall Street beginning in the 1960s, gaining his success as a broker, eventually offering him the opportunity to manage funds for people close to him. News of his apparent ability to make gains and never lose money spread like wildfire throughout the Wall Street community and eventually turned his small family business into a huge investment firm. To reduce suspicion, Madoff maintained that his gains were because he was mitigating risk on his stock purchases by exploiting options to hedge his portfolio. In the simplest form, this means that he was telling people that he was engaging in a pretty common investment strategy, which is creating an insurance plan for their investments by using â€Å"put options.† This is the agreement to sell the assets that one has on or before a particular date, in case the assets decline in value at a rate unfavorable to the purchaser. Although he was able to fool the majority of people, there were those who were sus picious of his activity and alerted the SEC, almost causing Madoff’s scandal to be exposed on several occasions (Scheer, 2009). Most believe that his scheme began in the early 1980’s, Madoff, however, claims that it had not begun until the 1990’s. It started with Madoff losing money, and therefore having to make a decision—either come clean to his investors that there was no money being made in his portfolio, or find a way to fudge the numbers. He chose the latter. This forcedShow MoreRelatedFraud, Subprime Mortgages, And The Hidden History Of Financial Crisis Essay1573 Words   |  7 PagesFraud, Subprime Mortgages, and The Hidden History of Financial Crisis â€Å"Hell is empty, and all the devils are here.† -William Shakespeare (The Tempest, Act1, Sn 2) Financial and economic experts still disagree over the specifics of what caused the recession of 2008. The fraudulent activities which resulted from the subprime mortgage crisisRead More Bernard L. Madoff: The Largest Accounting Fraud in History Essay2379 Words   |  10 PagesMadoff’s wealth management business. Largest Accounting Fraud in history. 1.) How was the fraud perpetrated? The scale of the investment Ponzi scheme perpetrated by Bernie Madoff is hard to pinpoint with any accuracy. There are likely many investors who will never come forward about their losses for a sloe of reasons. We are left to estimate the total losses, but $65 billion was the total showing on investor statements at the time the fraud was stopped. However, this number includes the fakeRead MoreThe most controversial case of fraud in history left more questions than answers. Bernard Madoff,1800 Words   |  8 PagesThe most controversial case of fraud in history left more questions than answers. 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