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Madoff LLC Fraud - Research Paper Example

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The founder and the president of the company was Mr. Bernard Madoff who used to invest the money for the hedge funds, institutions and wealthy people. It has further been found that the company that had been based in New York was the 23rd biggest market maker in the month of October, 2008 on NASDAQ. It was evident that the company handled approximately 50 million shares per day. The main activity of the company has been to handle the orders that the online brokers belonging to a few of the biggest US companies used to make such as the Citigroup Inc. and General Electric. It is evident that the company has been the foremost to mechanize market-making. In this type of dealing, the dealer tends to incessantly buy the stocks and sell them as well. Madoff’s firm has also been the biggest to offer “payment for order flow” (Glovin & Scheer, 2011). Bernard Madoff never revealed his financial statements and kept back them under his safe custody. Further, it has been noted that Madoff has also been one of the active members of the NASDAQ Stock Market related board of governors as well as the member of NASDAQ’s executive committee and also had been the Chairman of trading committee. It has been evident that greater than 75% of the firm that has been owned by Bernard Madoff, along with Peter Madoff who is his brother; were the only two persons who were recognized on the regulatory records, being the direct owners and the executive officers. The other family members operating for Madoff has been Peter Madoff’s daughter named Shana working as compliance attorney. Sons of Bernard Madoff namely Mark and Andrew, and Charles Weiner were in the trading section. Andrew invested his funds in the company, however he was stopped from doing so by Mark in the year 2001 (Glovin & Scheer, 2011). The company made use of the numerous marketing tactics for the purpose of drawing the customers and thus stimulating a new era where electronic trading was of priority. The company has been a highly profitable security firm tapping enormous volume of the stock trades from the Big Boards. The company during its initial days used to deal with the Over-The-Counter along with Pure-Brokerage-Pink Sheets transactions. It was because of the Rule 390, the company was able to trade in NYSE stocks. For the purpose of altering the execution practices, the company had to utilize the Cincinnati Stock Exchange. It has been evident that among the five brokers, Madoff has been one of them who had been involved in the creation of the NASDAQ. It was noted that the company’s spread was quite sublime. It started as an investment advisory firm. It has been noted that the company had not been recorded in the stock exchanges till 2006. It can be stated that in terms of the US Securities by the year 2000, Madoff Securities had been successful at becoming the top traders and had in approximation $300 million of assets (De La Merced, 2008). Three floors were occupied by the business of Lipstick Building. The 17th floor belonging to Lipstick Building was office of Bernard Madoff that had in approximation of less than 24 of the staffs. It has been found that only a few of the employees were allowed to enter into that building. The floor was named as the hedge fund floor (Henriques & Berenson, 2008). The branch office of Madoff was also in London that was completely separate and different to that of the Madoff Securities employing 28 people and thus handled the ...Show more
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Summary

Madoff LLC Fraud Table of Contents Background of the Company 3 Types of Frauds Committed 5 How Were They Caught 8 Controls Implemented 10 Status of Perpetrators 12 Conclusion 13 References 14 Background of the Company In the United States as well as abroad, Bernard L…
Madoff LLC Fraud
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