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    Bernard Madoff

    Uploaded by

    Shantnu Jain
    The Bernard Madoff Scam

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    © All Rights Reserved
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    Bernard Madoff

    Uploaded by

    Shantnu Jain
    80 views7 pages
    The Bernard Madoff Scam

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    © © All Rights Reserved

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    PPTX, PDF, TXT or read online from Scribd

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    The Bernard Madoff Scam

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    80 views7 pages

    Bernard Madoff

    Uploaded by

    Shantnu Jain
    The Bernard Madoff Scam

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    You are on page 1of 7

    Bernard Madoff

    The Biggest Ponzi Scheme


    The Scandal
    Started as a brokerage firm dealing in penny stocks in 1960
    Began by investing money for family and friends without any license
    Transformed into an investment fund in 50 years
    Offered consistent 20% returns on investment
    During recession in US, investors requested $7 Billion in withdrawals
    Actually a $50 Billion Ponzi Scheme
    Largest accounting fraud in American history
    Sentenced to 150 years in prison
    What worked in his favor
    Commission incentive scheme to investment advisors for investing in his firm
    Efficiency and speed of his operations
    Long track record of successful investing
    Was at the forefront of the computerization of stock trading
    One of the first 5 brokers to join NASDAQ
    Served on SEC advisory committees
    Part of NASD advisory council
    Ex Non Executive Chairman of NASDAQ
    Bernies personality
    Played hard to get
    The Victims
    The Disguise Split Strike Conversion
    Step 1
    Purchased common stock from a pool of 35 to 50 S&Ps 100 Index
    companies whose performance paralleled overall market
    performance.
    Step 2
    Sell call options at a strike price above the current index.
    Limit gains, generate cash.
    Step 3
    Buy put options at the current index value or very close to it using
    the call option premium cash.
    Pay off if the index falls, limiting or preventing losses.
    The Reality- Ponzi Scheme
    Secret Apex of Hedge funds
    Marketed his investment fund to feeder hedge funds
    Paid feeder hedge fund managers a commission instead of charging them fees
    Didnt allow them to mention his name in their marketing materials

    Cohmad
    Securities
    hedge fund
    Faireld
    Greenwich
    Group
    Ascot
    Partner
    Bank Medici
    of Austria

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