In what appears to be the biggest scandal in the history of Wallstreet Bernard,L Madoff, a former non executive SEC chairman , was put under a house arrest for running the biggest ever ponzi scheme which amounted for almost 50 billion dollars heist for clients all over the world.
What is it about the human nature that within the past 2 weeks we have seen people like Blagojevich and then Madoff getting into such scandals?
Greed it is. Wallstreet has seen many such instances where an individual has tried to beat the rules of the game just to see himself as a loser! No one can beat the markets!
What exactly is a Ponzi scheme?
A Ponzi scheme is a fraudulent investment operation that involves paying abnormally high returns to investors out of the money paid in by subsequent investors, rather than from the profit from any real business.
Madoff ran a vast options game .US officials now allege that Madoff was engaged in a Ponzi scheme—using new revenues from investors to meet payments due to existing investors—at least since 2005. As of yet, no one really knows how long Madoff was paying his old clients with money obtained from new ones. The scheme collapsed after clients requested some $7 billion in redemptions.
But what is more surprising is that even after knowing the red flags raised towards Madoffs scheme in the recent past SCE has done very little to restrict the fraud of such a magnitude.
Is the SEC really an effective regulator?
It will be interesting to see how the story unfold itself and give us more insight into probably the biggest scam of the Wallstreet history...
