Bernie Madoff's story is a very interesting tale of greed and deception. The actions of him and many of his associates present interesting questions about the occurrence of crime in financial industries. The purpose of this essay is to analyze the behavior of Madoff and his involvement in his ponzi scheme. This essay will also investigate some of the laws that exist to control white color crime and contrast those laws to street crimes. Finally this essay will examine how cultural norms with regard to white-collar crime has shifted in the last decade and the impacts of those shifts.
Madoff's Behavior
It is impossible to understand totally what Bernie Madoff was thinking as he conducted his scam. It appears that greed and the desire to appear successful and rich may have contributed to his behavior. The upper echelons of society are very competitive and many will do anything to win. This appears…...
mlaWorks Cited
The Associate Press (2011). Madoff: Government is a Ponzi Scheme. Daily Finance, 28 Feb 2011. Retrieved from a-ponzi-scheme/http://www.dailyfinance.com/2011/02/28/madoff-government-is -
Dodds, A. (2009) . After Madoff, White Collar Time to Match White Collar Crime. Minyanville, 30 June 2009 . Retrieved from sentence-Chin/6/30/2009/id/23344?refresh=1http://www.minyanville.com/businessmarkets/articles/WHITE-madoff-ponzi-collar-
Kramer, R. (2012). Are white collar criminals the true villians? Global Post, 9 Nov 2012. Retrieved from crime-jail-time-bernie-madoff-dreierhttp://www.globalpost.com/dispatch/news/business/companies/121109/white-collar -
Moyer. L. (2009). It Could Have Been Worse For Madoff. Forbes, 29 June 2009. Retrieved from beltway-madoff.htmlhttp://www.forbes.com/2009/06/24/bernie-madoff-prison-sentence-business -
Bernie Madoff's Fraud
The United States economy has experienced tremendous challenges related to financial practices including illegal fiscal activities and practices. An example of an illegitimate financial activity that hurts the country's economy is Ponzi schemes and other fraudulent activities. The largest Ponzi scheme yet was orchestrated by Bernie Madoff whose fraudulent mechanism crossed several continents. Bernie Madoff's scheme is regarded as the largest one yet since it took something bigger larger than the scheme to bring it to an end i.e. The 2008 global economic recession. Bernie Madoff's success in conducting the fraud provides insights regarding the operations of Ponzi schemes, human nature, and the role of regulatory agencies in preventing and dealing with fraudulent financial activities.
A Ponzi scheme is basically defined as a financial investment strategy that promises large returns to investors. However, the scheme differs from valid investment strategies on the promise that payment to investors is made…...
mlaReferences
Michael. (2013, February 12). The Bernie Madoff Scandal: A Short Overview of the World's
Largest Ponzi Scheme. Retrieved April 18, 2015, from http://thedebtweowe.com/the-bernie-madoff-scandal-a-short-overview-of-the-worlds-largest-ponzi-scheme
Taibbi, M. (2013, May 31). Why Didn't the SEC Catch Madoff? It Might Have Been Policy Not
To. Rolling Stone. Retrieved April 18, 2015, from http://www.rollingstone.com/politics/news/why-didnt-the-sec-catch-madoff-it-might-have-been-policy-not-to-20130531
Bernie Madoff
Describe three types of illegal business behavior alleged against Mr. Madoff and for each type of behavior, explain how the behavior is illegal or unethical in the conduct of business.
In the general sense, Madoff was accused of running a Ponzi scheme. This is a form of "pyramid scheme" in which essentially returns are paid to existing investors out of the principal being taken from new investors, eventually leading (as Madoff's scheme did) to a collapse when the entire system runs out of capital and investors cannot regain any of their own investment. Here is the official definition offered by the SEC (2011):
A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In…...
mlaReferences
Andrews, A. Hollywood star Bacon joins growing list of Madoff victims. Daily Telegraph, 1 Jan 2009.
Wall Street Journal. Madoff's victims. 6 March 2009. Online, accessed 21 May 2011 at: http://s.wsj.net/public/resources/documents/st_madoff_victims_20081215.html
U.S. Securities and Exchange Commission. Ponzi schemes -- Frequently asked questions. Online, accessed 21 May 2011 at: http://www.sec.gov/answers/ponzi.htm
Although Bernie Madoff eventually received justice for his crimes, the case study reveals the structural problems inherent in the Securities and Exchange Commission (SEC). An independent financial fraud investigator, Harry Markopolis, had delivered a critical smoking gun to the SEC, which summarily ignored the information. The situation suggests corruption at the highest levels of government and finance, if not full collusion and conspiracy. One of the problems with the SEC is that it seems to be deliberately populated by personnel who cannot actually prevent financial fraud. As the case study points out, the SEC personnel primarily consists of young attorneys and “lifelong government employees,” many of whom end up working by the very same investment firms that were under SEC investigation (p. 2). Another problem with the SEC seems to be its lax attitude towards financial fraud, evident by the way it dismissed the Markopolis information out of hand. The SEC…...
mlaReferences
A Case Study: Opportunity Lost.
Williams, M. (2009). Why did the SEC fail to spot the Madoff case? Retrieved online: http://blogs.reuters.com/great-debate/2009/01/06/why-did-the-sec-fail-to-spot-the-madoff-case/
That immediately lead Markopolos to suspect that Madoff might not have ever even traded shares at all but was simply managing a tremendous Ponzi scheme, disguising the dispensation of new clients' money as dividends and investment income paid out to exiting clients (Markopolos, et al., 2010).
However, Markopolos also suspected that Madoff was involved in an illegal operation for a reason entirely distinct from any of the sophisticated mathematical methods that he used to analyze the supposed trading strategy itself. Specifically, he suspected Madoff because his professional behavior was so bizarre: Madoff, head of a prominent New York brokerage firm, would maintain a secretive money management business operation "on the side" of his mainstream business and why he would furnish his hedge fund management services to his hundreds of wealthy investors without ever charging a fee for his services (Leor, 2010; Markopolos, et al., 2010).
Markopolos's Multiple Unsuccessful Attempts to Alert…...
mlaBibliography
Diana B. Henriques. The Wizard of Lies Bernie Madoff and the Death of Trust. New York: Henry Holt & Co. 2011.
Andrew Kirtzman. Betrayal: The Life and Lies of Bernie Madoff. New York:
HarperCollins. 2010.
Adam LeBor. The Believers: How America Fell for Bernard Madoff's $65 Billion
Madoff and the Ethics of Business
The author's viewpoint is objective and factual: it relates the episode in history regarding Bernie Madoff's "ponzi scheme" and shows how he was able to pull it off for so long, essentially lying to all of his clients, regardless of their individual worth and/or fame (Stanwick, Stanwick, p. 258).
The major issue presented in this case is the lack of transparency that Madoff showed (a major ethical issue) and the too-good-to-be-true promise of returns that no one else in the investment sector was able to give. Another issue was his closed trading system as well as the fact that there was no correlation between Madoff's reported trade volume and the volume of the S&P options market -- someone was lying. Why the SEC failed to find any evidence of wrongdoing for so many years on Madoff's part should raise questions about the credibility of the SEC.…...
mlaReferences
Durden, T. (2016). Everyone Jumping On The Bandwagon: BofA Says To Stay Long
Gold Until $1,375, "$1,550 A Possibility." ZeroHedge. Retrieved from http://www.zerohedge.com/news/2016-02-11/everyone-jumping-bandwagon-bofa-says-stay-long-gold-until-1375-1550-possibility
Stanwick, P., Stanwick, S. (2014). Understanding Business Ethics. NY: Sage.
Business Ethics - Contemporary Case 2: Madoff's Investment Firm
The investment Ponzi scheme of Bernie Madoff and his hedge fund for wealthy clients was a major violation of ethics by Madoff, as he showed a severe lack of transparency (hiding his actions and never divulging how his trades were profitable) and a consistent habit of lying to clients by using one's fund to pay off another. Madoff's investment firm was essentially based on deception: he promised extraordinarily high returns on investments made the world's wealthy elite -- and so long as they did not all attempt to withdraw their investment at the same time, and so long as new investors continued to come to the firm, Madoff had enough capital on hand to pay out the promised returns. The fact that he did not actually make profitable investments with his clients' money, however, while claiming that he did so, is what…...
mlaReferenes
Schultz, K., Greenbert, D. (2009). Bernie Madoff's Billionaire Victims. Forbes.
Retrieved from http://www.forbes.com/2009/03/12/madoff-guilty-plea-business-wall-street-celebrity-victims.html
Madoff Securities case occurred because of fraudulent investment schemes due to lack of regulation as well as insufficient oversight of specific financial intermediaries along with dismissal of opportunistic behavior. To understand why such an incident happened in the first place, it is important to identify the kind of scheme led by Madoff. It is called a Ponzi scheme. In a Ponzi scheme, an unsustainably big pool of investors must be maintained to keep it afloat. It begins with a simple promise to a few investors of doubling an amount they decided to invest. Rather than investing that money and doubling it, the person involved in the scheme takes money from a successive round of investors and the scheme continues (Knapp, 2011). The formula is ROI-R-I.
The reason why the Ponzi scheme went unnoticed for so long was partly because of Madoff's reputation and a huge regulatory hole. This major discrepancy some…...
Over the course of time, assertive laws are evolving which are supposed to deal with any issues quickly. This means that all financial firms will face higher costs and greater amounts of time in complying with these new guidelines. ("Dodd Frank")
Conclusion
Clearly, the Bernard Madoff scandal reshaped investor confidence and the regulatory environment. This is because many of his clients suffered tremendously from the firm's activities. In some cases, individuals were forced to sell their homes. While at other times, many nonprofits were forced into bankruptcy from being overly exposed. This resulted in the trustee utilizing aggressive tactics in recovering assets.
These actions set the stage for regulators, actuaries and fiduciaries to begin taking a more assertive stance when protecting the interests of the public. As a result, much stricter guidelines are being imposed. These areas are impacting the operating procedures of firms and how they are accounting for investor funds.…...
mlaReferences
"$2.48 Billion." Daily Mail, 2012. Web. 4 Dec. 2012
"Dodd Frank." SEC, 2012. Web. 4 Dec. 2012
"The Securities and Exchange Commission." SEC, 2012. Web. 4 Dec. 2012
Kirtzman, Andrew. Betrayal. New York: Harper, 2010. Print.
Ethical behavior of a person or a corporation greatly affects the stakeholders with which that person is involved. Often, people and companies take serious consideration when it comes to those stakeholders, and they work to take good care of the people who are involved with them (Keller, 2002). There have been cases, though, where ethical behavior has been ignored in the name of profit. Eventually, most companies and people who ignore their ethics are caught and punished, but not before they end up harming the financial and emotional lives of many of their stakeholders. Plato once said that the nature and the origin of justice was that men who were capable of doing wrong to other people would often do so. He also said that men who did not have enough strength to keep themselves from being harmed by others would not do harm to other people.
In other words, if…...
mlaReferences
Anderson, A.A. (1999). Downsizing and the Meaning of Work. Babson College Business Ethics Program.
Keller, K.W. (2002). What does a business owe the community? The Signal.
Thomas Pynchon, Bleeding Edge
One hallmark of postmodern literature is a willingness to mingle high and low registers, and to subvert popular and recognizable genres of literature with material that might seem foreign or that frustrates customary expectations. By any standard, Thomas Pynchon is one of America's pre-eminent postmodern novelists, and his 2013 novel Bleeding Edge follows both of these customary procedures. I hope to demonstrate that Pynchon's purpose in Bleeding Edge is twofold: he is engaged in "historical fiction," but of a peculiar sort -- writing about the very recent past, in a novel that covers the events of September 11, 2001 -- and he is also writing a postmodern detective novel. In both ways, Pynchon is able to indulge a crucial theme which critics have identified as being central to his work as a whole: the idea of paranoia.
On the surface, Bleeding Edge would appear to be a novel…...
In the first-round survey, a majority of investors cited diversification as their main objective in allocating to hedge funds. Among the second-round interviewees who were planning to increase their target allocations by 10% or more, half named diversification as the motivating factor. Among the approximately one in ten who were planning to decrease allocations by at least 10%, concern with a lack of transparency was the most frequently cited reason.
(4) Institutions are thinking and acting as long-term investors. While almost a quarter of second-round interviewees said they have liquidated some investments or plan to do so, overall the investors surveyed showed no inclination toward a long-term exodus from hedge funds. This is understandable, considering that 93% of all interviewees said they make hedge fund investments with a time horizon of at least three years, and more than half have a time horizon of five years or more.
(5) Investors are,…...
mlaBibliography
Cumming, Douglas and Dai, Na (2008) Capital Flows and Hedge Fund Regulation. SSRN Journal. Online available at: http://ssrn.com/abstract=1026683 .
Dawn, Ralph and Young, Chuck (2009) Testimony before the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises before the House of Representatives (2009) Orice M. Williams, Director of the Financial Markets and Community Investment. GAO Report. Online available at: http://www.gao.gov/htext/d09677t.html
Glovin and Scheer (2008) Madoff Charged in $50 Billion Fraud at Advisory Firm. Bloomberg.com. Online.
Hedge Funds Under the Microscope: Examining Institutional Commitment in Challenging Times. Greenwich Associates. Online available at: HFs%20Under%20Microscope_Overview.pdfhttp://cdn.rsys1.net/ig.rsys1.net/responsysimages/seic/__RS_CP__/SEI_
Economic crash can be viewed from a number of perspectives ranging from causes and effects to the 2008 Crash's resemblance to the Crash of 1929, which began the Great Depression. This paper will consider the 2008 recession from the standpoint of the financial banking industry, which, according to economic journalists like Matt Taibbi (2010), played a major and significant role in the crumbling of the nation's economy -- just like it did in the Lawless Decade also known as the oaring Twenties.
Big Banking Meets Big Government
What has now become known as the Era of De-egulation actually had its beginnings in the 80s decade known just as much for its rampant excess as the early 20s were known for their unbridled lawlessness. Yet, while the latter enjoyed the snubs-to-the-law bootlegging speakeasies, the former enjoyed the merging of the financial sector with the political -- which began during eagan's tenure in the…...
mlaReference List
AP/HuffPost. (2011). Charles Ferguson's Oscar Speech Rips Wall Street: 'Inside Job'
Director Levels Criticism During Acceptance. HuffPost Business. Retrieved from http://www.huffingtonpost.com/2011/02/28/charles-ferguson-oscar-speech-inside-job_n_828963.html
Sann, P. (n.d.). The Lawless Decade: A Pictorial History of the Roaring Twenties.
Retrieved from http://lawlessdecade.net/
Your Name
INDS 400-001
August 06, 2014
Business and Religion
IPS Integration Essay
Cognate/Career Synthesis Paper:
Incorporating a Christian orldview
MLA
Presented in Partial Fulfillment
EDU 400: Capstone
Your Name
John Doe
EDU 400-001
06 August 2014
Business and Religion Synthesis:
Incorporating a Christian orldview
Incorporating a more Christian worldview would be largely beneficial to a range of careers as such a perspective can help guide all endeavors along a more moralistic path. The last decade or so has brought us some of the most staggering corporate scandals that the human race has ever known. These were scandals which crippled the economy and which brought the nation to untold amounts of financial struggle and unhappiness. To this day, the government and private businesses are still working manically hard to dig the country out of a completely destructive great recession. The more we understand how such corporate scandals were started and enabled in the first place, the better prepared we…...
mlaWorks Cited
Cornwell, Lisa. Son of Madoff\'s accountant kills himself in Ohio. 18 November 2012.
working on financial practice problems can help students to apply key concepts and principles.
Understanding various financial practice problems will help all students to ensure that they have a foundation for knowing how money and the world of finance works. This is important because, it will serve as foundation that will allow everyone to be prepared for: objectively evaluating their business, personal finances and investments. Once this takes place, it means that we can make more prudent financial decision by: avoiding common mistakes. As, these tools will help everyone in: identifying potential frauds and it will give us a sense of reality. This is the point that these ideas will prevent us from making critical errors that could have a dramatic impact upon: our net worth and the kinds of decisions that will have an effect on our future.
A good example of individuals who were never able to learn this…...
mlaBibliography
Madoff Used Multiple Compliance Techniques. (2010). Dave Manuel. Retrieved from: http://www.davemanuel.com/2010/03/04/bernard-madoff-and-the-power-of-influence/
The Madoff Affair. (2009). PBS. Retrieved from: http://www.pbs.org/wgbh/pages/frontline/madoff/
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