http://www.scribd.com/doc/9231188/MadoffSECdocs20081217 Interesting reading for those of you with nothing to do today.
Wow. It took a while to read, but seemingly legit evidence kept coming. Someone at the SEC should be hung.
What is the gist of it? Or can you post the article? It’s blocked here.
Have you seen Madoff’s tick on TV? I wonder if it is because of the stress of deceiving investors for so many years and the pressure coming out physically . . .
It is an anonymous letter to the SEC spelling out 30 separate red flags surrounding Madoff’s firm. I can’t post it due to it being 15 pages. The warnings are clear, the suspicisions are real, and the numbers support the beliefs. The letter clearly suggests in November 2005 that it was a ponzi scheme, and nothing was done about it. That is not to say that things would have been any better if it had been discovered then instead of now, but 3 more years passed nevertheless.
The problem is that whoever submitted that letter should have let his buddy read it and edit it into a convincing document, not a self-aggrandizing rant. Of course, the guy was exactly right but the aggressive prose, poorly explained contentions, and poor format caused it not to be taken seriously.
its also here (I think its the same anyway- couldn’t open the above link) http://online.wsj.com/documents/Madoff_SECdocs_20081217.pdf
Original complaint by Markopolos is http://online.wsj.com/documents/Madoff_SECdocs_20081217.pdf and SEC opening and closing remarks are here, http://online.wsj.com/public/resources/documents/Madoff_SECRecommend_20081217.pdf SEC was investigating for two years. Both these documents speak for themselves.
JoeyDVivre Wrote: ------------------------------------------------------- > The problem is that whoever submitted that letter > should have let his buddy read it and edit it into > a convincing document, not a self-aggrandizing > rant. Of course, the guy was exactly right but > the aggressive prose, poorly explained > contentions, and poor format caused it not to be > taken seriously. Agreed.
Ouch! you want a more convincing document than this? The guy put out 29 red flags with detailed analysis of every aspect of this bozo’s business, cited many public references which doubted the generated returns, my gosh, everything is there. It wasn’t a term paper, it was a damning evidence of a majot fraud, some at the SEC should have had the balls to cut through to the chase and stop this guy a long time ago.
Guys, are we sure this document is not a fake ? i.e written after the facts and pretending to have been written in 2005 ? Just a weird feeling that is it way too current… I dont know, its just too good and accurate, it nails 100% of the failures with perfect knowledge. Some facts were known by many people since 2001 but this one just has all of them. I almost want to say that like Madoff returns, it is “too good to be true”… what do you think ? has this document been verified/certified ?
sorry, it looks like the SEC closing document actually refers to an anonymous letter sent to the BDO (i guess the Boston department of the SEC mentioned by the guy who wrote the document ?)
Seriously, this complaint was more than sufficient. When I heard that the SEC received complaints on this matter, I always assumed they were along the lines of “Madoff is running a pyramid scheme, shut that bastard down!” But this? I mean this guy basically handed the case to the SEC on a silver platter. Plus – at least according to the closing remark documents the SEC released – the source had been helpful in a previous investigation. Unfortunately, I don’t think the person that reviewed this had the slightest clue about a “split-strike conversion” or how unusual BM’s fee structures was.
I think it’s probably real and agree with Joey. Even though in hindsight it it spot on, there are some strange things about it that might have made it seam less-than-serious to the person reading it. ei. starting the whole letter with a paragraph explaining how the author would be due a portion of any fine imposed on Madoff. Or these types of statements: “An official from a Top 5 money center Bank’s FOF told me his firm wouldn’t touch Bernie Madoff with a ten foot pole and that there’s no way he’s for real.” [red flag#20 ©] …not the most eloquent argument. I agree that SOMETHING should have been done in response, but then again we don’t know if there was any reaction or if it was just filed away.
Honestly, i think the document is very-well written and it can only be taken seriously. I agree with TJR, i think the “investigators” from the SEC were not even able to understand what the trader was talking about in his document. The trader should have been invited to the investigations (remaining anonymous). If the SEC triggers an investigation based on some guys document, why would you not share you findings step by step with him ? Also, another point is why wait 6 years (from 1999 to 2005) to follow-up on your document if you think you have discovered the biggest Ponzi-scheme of the century ?
wyantjs Wrote: ------------------------------------------------------- > JoeyDVivre Wrote: > -------------------------------------------------- > ----- > > The problem is that whoever submitted that > letter > > should have let his buddy read it and edit it > into > > a convincing document, not a self-aggrandizing > > rant. Of course, the guy was exactly right but > > the aggressive prose, poorly explained > > contentions, and poor format caused it not to > be > > taken seriously. > > > Agreed. Ditto.
JoeyDVivre Wrote: ------------------------------------------------------- > The problem is that whoever submitted that letter > should have let his buddy read it and edit it into > a convincing document, not a self-aggrandizing > rant. Of course, the guy was exactly right but > the aggressive prose, poorly explained > contentions, and poor format caused it not to be > taken seriously. The document is clear and is well-written, he even used the Mosaic theory :). It’s crazy how no one took action to even check his argument, there are probably hidden factors that we’re not aware of.
TJR Wrote: ------------------------------------------------------- > Seriously, this complaint was more than > sufficient. When I heard that the SEC received > complaints on this matter, I always assumed they > were along the lines of “Madoff is running a > pyramid scheme, shut that bastard down!” But > this? I mean this guy basically handed the case > to the SEC on a silver platter. Plus – at least > according to the closing remark documents the SEC > released – the source had been helpful in a > previous investigation. > > Unfortunately, I don’t think the person that > reviewed this had the slightest clue about a > “split-strike conversion” or how unusual BM’s fee > structures was. I agree with that, of course. This was pretty damning stuff and the math done in the document was conservative and to the point. There was plenty in this document to alert any thinking person that something was really wrong. Uh, anybody ever had any contact with enforcement people at these agencies? Honestly, I had a phone call from one at CFTC once that I thought was a friend playing a prank on me because the guy on the other end of the phone knew so little. This wasn’t like “split strike conversion”, this was like “calendar spread” and “Calyon” (huge futures broker). I had to call him back just to make sure the call was real.
Forget the math about the strategy returns and all this stuff, it’s too complicated 
What about the Open Interest in the OEX options (about $11 millions) versus the amount of money invested (billions) ? I mean anyone with access to yahoo financial can check the open interest on all the OEX puts and calls and figure this out.
It’s worth mentioning that Markopolos is a CFA charterholder and a past president of BSAS (according to Wikipedia) – just in case anyone is questioning the value of the charter.