StudentShare solutions
Triangle menu

Corporate/banking scandel - Essay Example

Nobody downloaded yet

Extract of sample
Corporate/banking scandel

But there are doubts if all his investors could ever fully recover their investments. Explanations why the scandal happened: how it is related to separation of ownership and management. The discovery of Maddoffs’s scheme was only accidental, as Harry Markopolis, a portfolio manager for an equity derivatives asset firm in Boston was asked to analyze Maddoff’s money making methods. Thereupon, he discovered Maddoff was using a Ponzi scheme. Markopolis, in an interview by Dick Carozza (May 2009) said that he had tried to convince and submitted evidences of the fraud to the SEC for 9 years, but to no avail because SEC would not listen. They are convinced that Maddoff was clean because he is such a respectable person in the financial community and that Maddoff strategy was doubtful. His scam was finally uncovered in 2008, when the stock market crumbled, and as the investors rushed in to redeem their investments, Madoff ran out of cash and turned himself in. After pleading guilty on March 12, he was sentenced to 150 years of imprisonment with losses estimated from $10 billion to $65 billion. How he was able to fool numerous people that includes high ranking bank officials, i.e. UBC, HSBC, is mind-boggling up to this time. Normally, a Ponzi scheme operates on a promise of higher interest for an investment, but Maddoff has no promise of that nature. He kept his interests low, but made regular payments that conservative investors are convinced on keeping their money on him. Added to that is the SEC’s confirmation of the truthfulness of Maddoff’s transactions. Even the banks where he kept his transactions such as the Chase Manhattan Bank, did not raise concerns even if they noticed billions of dollars going in and out of the bank , said Maddoff (Gelles, David and Tett, Gillian. April 8, 2011). This scam went undetected for a number of years so he was able to lure a number of wealthy investors abroad. Wealthy investors invested for tax shield purposes, four of his wealthiest client invented due ethnicity of being Jewish, while others needed an investment to park their wealth on(Gelles and Tett). The separation of ownership and management. Maddoff’s company is registered as Bernard L. Maddoff Investment Securities LLC., with main business as a broker dealer. He acts as Chairman of his company. His managers in the firm were all of his relatives. His brother, Peter, was a senior managing director. Both of Madoff’s sons, Mark and Andrew, joined the team after finishing their education. Charles Weiner, a son of Mr. Madoff’s sister, also joined the firm, and Peter Maddoff’s daughter, Shana, took a job with the company as a lawyer (Metapedia). He operates singly in perpetrating his scam, and his sons were found to be unaware of his activities. But prior to his arrests, or only five days earlier, he admitted to his staff that he is operating a big Poinzi scheme. (Metapedia). This is an implied admission that ownership and management is done only by Bernard Maddof. Strategies to prevent such scandals Maddof’s case is an example of a white collar crime that is done by someone who is knowledgeable to the company information and a person well respected in the business community, so it is difficult to discern a fraud. However there are strategies to prevent such scandals. Here, audit plays an important role, and transparency in each transaction is suggested. A fraudster can easily be spotted according to his ...Show more


Xiaolin Lu Finance and Accounting November 2012 A Corporate/banking Scandal: The Bernard Maddoff’s Ponzi scam Perhaps, the Maddoff’s Ponzi scam is one of the biggest financial scandals, and a neat one too, that ever happened in the financial community…
Author : effertzisom
Corporate/banking scandel essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Corporate/banking scandel"
with a personal 20% discount.
Grab the best paper

Check these samples - they also fit your topic

The determination of the suitable credit product to be offered to Mr. Mark Angelo and his company Mark Equipment Pty Ltd. necessitates the credit assessment of Mr. Mark Angelo and his company. The collected financial information have to be analyzed in order to examine the ability of the client, Mr.
6 pages (1500 words) Essay
Deposit insurance is fixed and pays claim from a pool of funds to which every depository institution frequently contributes (Freixas & Rochet, 2008). However, this covers only a fixed maximum amount per account holder. Thus depository insurance is the measure taken by various banks to protect their client’s savings, either fully or partly to avoid the bank from returning.
16 pages (4000 words) Essay
Internet Banking (E-Banking)
Internet banking is another concept of web based banking. The deployment of whole sale or retail banking services can also be referred to as E-banking. It involves individuals, and corporate customers.
6 pages (1500 words) Essay
With the dynamism in the current business environment such as increased costs of doing business and competition, business organizations and financial institutions seek for ways of reducing costs and increasing their productivity levels. Through consolidating by mergers and acquisitions, banks hope to curb these challenges.
5 pages (1250 words) Essay
Recent incidences of corporate or banking scandals happened in U.S companies or financial insitutions
How the Scandal Happened As earlier stated, the Lehman Brothers scandal is comparable to Enron scandal in 2001. The investigations conducted found that the top executives of the company used the Repo 105 transactions to reduce the leverage on the right side of the company’s statement of financial position.
3 pages (750 words) Essay
Recent incidences of corporate or banking scandals
Conclusion Personal opinion The government should intervene and dictate the relationship that the politicians should have when it comes to controlling of public corporations. This also goes for the privately run corporations since politicians have a tendency of poking their noses where it is not necessary.
3 pages (750 words) Essay
It is said that the arbitrary nature of both risk classes and corresponding risk weights prompted the Basel Committee to seek to replace the Basel 1 risk-based capital regime by one with greater differentiation and risk sensitivity. For this reason, the Basel Committee has proposed in the new Basel II Accord to base credit risk weightings either on a simple approach based on the ratings of external rating agencies or one of two approaches based on banks' own internal ratings.
15 pages (3750 words) Essay
Corporate governance of Westpac Banking Corporation AUSTRALIA
Corporate governance is a complex concept as it deals with many different economic happenings.Looking at a broader perspective corporate governance can be regarded as a set of procedures, customs, guidelines, rules and regulations affecting the way a corporation is planned, directed, governed or controlled.
5 pages (1250 words) Essay
The bank’s net liabilities worth £1.3 billion was nearly twice that of its investment capital, a figure large enough to capsize its entire assets, cause job losses to over 1200 employees and subsequently,
10 pages (2500 words) Essay
From a critical view, the author’s research is an informative advance to update the society and banking stakeholders about the
1 pages (250 words) Essay
Hire a pro to write
a paper under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
Comments (0)
Click to create a comment
Contact Us