[hrothgar]

blackshoe, on Dec 21 2008, 06:46 PM, said:

hrothgar, on Dec 21 2008, 09:23 AM, said:

He was ordered on Friday to remain in his Manhattan home under 24-hour surveillance and to hire security guards for protection.

Madoff may in fact have hired private security guards, but if he did, it wasn't because he was "ordered" to do so.

I should have been more clear and noted that I was quoting from the AP

I don't have first hand knowledge whether Madoff was ordered to hire security guards or if this is just sloppy sentence construction

[JoAnneM]

It sounds to me like most people didn't even know they were in a Ponzi scheme. Also, what about the guy who had been complaining to the SEC for the past 8 years about Madoff. I think there are some people in the SEC who should go to jail! Probably some very rich people.

[Al_U_Card]

Seems to me that the "classic" Ponzi scheme promises exorbitant returns (50-100-1000%) while Madoff was just "outperforming" the market. When you think that the "market" outperforms most analysts and money managers, this should already be a red flag....

[Winstonm]

Al_U_Card, on Dec 21 2008, 11:59 AM, said:

Seems to me that the "classic" Ponzi scheme promises exorbitant returns (50-100-1000%) while Madoff was just "outperforming" the market.  When you think that the "market" outperforms most analysts and money managers, this should already be a red flag....

In this case it was because returns were too smooth, too consistent to be valid. Experts in this type of mathematic-modeling showed that the returns claimed from the strategy utilized were impossible to achieve. Not unlikely - impossible. This information was given to the SEC who did nothing about it. Cox was more interested in tearing down the SEC than in its regulatory duties.

Quote

He was ordered on Friday to remain in his Manhattan home under 24-hour surveillance....

Boy, there is quite the penalty - ordered to stay locked up in your $7,000,000 Manhattan penthouse apartment - without home caviar delivery, I bet!

[pigpenz]

Winstonm, on Dec 21 2008, 01:21 PM, said:

Al_U_Card, on Dec 21 2008, 11:59 AM, said:

Seems to me that the "classic" Ponzi scheme promises exorbitant returns (50-100-1000%) while Madoff was just "outperforming" the market.  When you think that the "market" outperforms most analysts and money managers, this should already be a red flag....

In this case it was because returns were too smooth, too consistent to be valid. Experts in this type of mathematic-modeling showed that the returns claimed from the strategy utilized were impossible to achieve. Not unlikely - impossible. This information was given to the SEC who did nothing about it. Cox was more interested in tearing down the SEC than in its regulatory duties.

Quote

He was ordered on Friday to remain in his Manhattan home under 24-hour surveillance....

Boy, there is quite the penalty - ordered to stay locked up in your $7,000,000 Manhattan penthouse apartment - without home caviar delivery, I bet!

yes the NY times showed graphs back to 1991 comparing the Madoff payouts to what the economy was doing...when stuff was down in 2000 and 2008 Madoff was still showing 10% plus gains.

Some economists in Europe have been trying to duplicate Madoffs strategy and were never able to do it, so they recommended that their clients not get involved but their clients still wanted to get in.

[barmar]

pigpenz, on Dec 22 2008, 09:10 PM, said:

yes the NY times showed graphs back to 1991 comparing the Madoff payouts to what the economy was doing...when stuff was down in 2000 and 2008 Madoff was still showing 10% plus gains.

For a hedge fund, it's not that hard to make a profit in a down market -- you just switching from buying stocks to shorting them.

Quote

Some economists in Europe have been trying to duplicate Madoffs strategy and were never able to do it, so they recommended that their clients not get involved but their clients still wanted to get in.

I think that's the crux of it. All they could say was that something seemed fishy, but they couldn't pinpoint specific problems. Without definitive evidence that he was doing something wrong, I think most investors were willing to accept that he was just smarter than everyone else (presumably timing his switches from buying to shorting well), and take the profits he offered.

[mike777]

I still wonder how the accountant, auditor can say there is around 50 billion bucks of assets in the fund when in fact there was closer to zero assets? And this error happens year after year after year? OTOH if the SEC does not notice, well just what do they notice?

Also I love, just love all the quotes in the newpapers of the employees who say...."I worked for other parts of the business, not the asset management side"...I mean did anyone work there? Did anyone notice no one worked there?

[Winstonm]

mike777, on Dec 23 2008, 01:55 PM, said:

I still wonder how the accountant, auditor can say there is around 50 billion bucks of assets in the fund when in fact there was closer to zero assets? And this error happens year after year after year? OTOH if the SEC does not notice, well just what do they notice?

Also I love, just love all the quotes in the newpapers of the employees who say...."I worked for other parts of the business, not the asset management side"...I mean did anyone work there? Did anyone notice no one worked there?

Apparently, if this is to be believed, only Madoff himself worked there and only he knew what was going on.

He also has a bridge for sale in Brooklyn, I understand.

[Winstonm]

barmar, on Dec 23 2008, 12:44 PM, said:

pigpenz, on Dec 22 2008, 09:10 PM, said:

yes the NY times showed graphs back to 1991 comparing the Madoff payouts to what the economy was doing...when stuff was down in 2000 and 2008 Madoff was still showing 10% plus gains.

For a hedge fund, it's not that hard to make a profit in a down market -- you just switching from buying stocks to shorting them.

Quote

Some economists in Europe have been trying to duplicate Madoffs strategy and were never able to do it, so they recommended that their clients not get involved but their clients still wanted to get in.

I think that's the crux of it. All they could say was that something seemed fishy, but they couldn't pinpoint specific problems. Without definitive evidence that he was doing something wrong, I think most investors were willing to accept that he was just smarter than everyone else (presumably timing his switches from buying to shorting well), and take the profits he offered.

I think you miss the details. Madoff's stategy type was known - it was also known to be mathematically impossible - not unlikely but Impossible - to produce the returns he claimed.

It was not the overall return but the smoothness of returns that was the key - you simply cannot return profit every single month without some degree of volitility.