Patterico's Pontifications

12/11/2008

Legendary Trader Arrested for $50B Ponzi Scheme

Filed under: General — Patterico @ 6:30 pm



Yeesh.

UPDATE: In comments, DRJ notes that the guy and his kin are Democrat donors. Who’da thunk it?

12 Responses to “Legendary Trader Arrested for $50B Ponzi Scheme”

  1. Well, the question of the season is:
    Who did he make political contributions to, and how much?

    Another Drew (821fe5)

  2. Mr. Madoff and some of his kin prefer the Democrats and their PACs.

    DRJ (b4db3a)

  3. I can’t understand it?
    Democrats are supposed to be for the little guy, promoting equality, advocating social justice?
    And we find out he’s just another crook, just with a bigger horizon than Hot-Rod.

    Another Drew (821fe5)

  4. That $50 billion figure for investor losses seems awfully high for a Ponzi scheme with a small number of investors. I’m curious how they calculated it and if correct and if it represents cash as opposed to paper losses, where it went.

    daleyrocks (5d22c0)

  5. Let me tell you how bad this is. Madoff had another business which was a market maker in hundreds of NASDAQ stocks. If his hedge fund is short tens of billions of dollars, there’s a chance that he “borrowed” money from trades waiting to settle. These are trades that may never settle. Madoff told the SEC he ran a $17 billion hedge fund, but he says he lost $50 billion. Where did the rest of the money come from?

    Official Internet Data Office (244abe)

  6. OIDO – Madoff said his hedge fund has been insolvent for years. If he’s been kiting his market operation from his hedge fund, the money was sucked out years ago according to his statement. If you’re worried trages won’t settle, all you have to do is wait a couple of day, right?

    daleyrocks (5d22c0)

  7. If he’s been kiting his market operation from his hedge fund

    I mean the other way around.

    Official Internet Data Office (244abe)

  8. Former. Chairman. of. NASDAQ.

    That says a lot right there.

    aphrael (f785e6)

  9. OIDO – With three day settlement, your suspicions will be answered. If there was a merry go round of funds between his market making operation and his hedge fund my hunch is it would have been discovered before. How much inventory do market makers like to carry?

    daleyrocks (5d22c0)

  10. That $50 billion figure for investor losses seems awfully high for a Ponzi scheme with a small number of investors

    That’s because those “small numbers” included other funds, each of which had it’s own investors, and some of THOSE investors might have been funds that had investors, and so on…

    Scott Jacobs (90ff96)

  11. That $50 billion figure for investor losses seems awfully high for a Ponzi scheme with a small number of investors.

    Don’t worry about it. According to the linked article, Madoff faces up to $5 million in fines if convicted. We can all rest easy tonight knowing that he will be required to reimburse .001% of the money he swindled. Yeah, I know, he’ll face civil action too, but what do you want to bet he already has the money squirreled away where it can’t be touched?

    JVW (bff0a4)


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