 Wall Street Weblog
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Monday, January 12, 2009 Madoff - Is it really $50 BillionIt has been suggested that the scale of the Madoff fraud may not be as large as first made out.
8:02 pm gmt The amount of $50 Billion has been bandied about a lot since the news broke, however this figure has not been verified. The actual figure may be much less. The other question is how much of the money is left. No bank has come forward claiming that Madoff lent any money from them, so it may be that his "fund" was not leveraged. If this is the case the extent of the losses may be limited. The known cases where money was invested with Madoff, the total amount involved is well below the 50billion amount. It may very well be the case that some of the amount invested may never be known - this is because some of it may have been unclaimed income, and the investors may not want to come forward in fear that their local tax authorities may investigate them. This may be the case in Central and South America in particular. Whatever the total amount lost is, there are sure to be many people who have lost vast fortunes in the whole saga, and many people may now think twice before investing in hedge funds, in fear that they not be what they claim to be. Tuesday, January 6, 2009 The Wall Street Journal Reports on MadoffHenry Kaufman, the former Salomon Brothers chief economist whose bearish views decades ago earned him the nickname "Dr. Doom," lost several million dollars with Bernard Madoff, making him one of the most prominent Wall Street figures to emerge as a victim of the alleged Ponzi scheme. Mr. Kaufman, 81 years old, had the money in a brokerage account with Bernard L. Madoff Investment Securities for more than five years, he said in an interview Tuesday. Meanwhile, a federal bankruptcy judge in Manhattan overseeing the liquidation of the Madoff firm on Tuesday approved a transfer of $28.1 million from one of Mr. Madoff's bank accounts to the courtappointed trustee of the firm, who said the funds will be used for satisfying customer claims. On Wednesday, Mr. Madoff is expected to turn over details of his personal assets, liabilities and accounts to government investigators. Kevin Bacon, the actor who has appeared in movies from "Footloose" to "Frost/Nixon," was also an investor in Madoff along with his wife, actress Kyra Sedgwick, Mr. Bacon's spokesman Allen Eichhorn said Tuesday. The investment was earlier reported by New York magazine's Web site. Mr. Kaufman earned the Dr. Doom nickname as a result of his consistent predictions while at Salomon Brothers in the 1970s and early 1980s that interest rates would rise and bond prices would fall. More recently, Mr. Kaufman was a director of Lehman Brothers Holdings Inc. and was chairman of the Lehman board's finance and risk committee before the Wall Street firm's September descent into bankruptcy. Like many other Madoff investors, he is also a prominent supporter of Jewish institutions, including Yeshiva University. In an interview Tuesday, Mr. Kaufman said his Madoff loss was "no more than a couple percent of my entire net worth" and "immaterial to my financial well-being." "Fortunately my net worth is higher than it was at the end of last year -- after working very hard to achieve that," Mr. Kaufman said. His net worth is several hundred million dollars, according to a person familiar with the matter. Despite the Madoff losses, Mr. Kaufman made money in 2008, he said, in part by shorting the Standard & Poor's 500. Mr. Kaufman said he didn't recall who introduced him to Mr. Madoff but said he trusted him with his money and was "shocked" by the alleged fraud. "You ask yourself, how could that happen? He was a reputable individual." Mr. Madoff's "background, his associations" were reasons for comfort, Mr. Kaufman said. He called the alleged fraud "a terrible situation" and "another reflection of loose credit, of very rapid credit expansion . . . which tends to breed all kinds of excesses."In the filing Mr. Madoff is to make Wednesday to the Securities and Exchange Commission, he also is expected to provide names and locations of entites that held accounts or assets for his firm. The filing won't be public. Before his arrest, Mr. Madoff allegedly told his sons that there was $200 million to $300 million left in his firm, according to court documents and people familiar with the case. Meanwhile, the court-appointed trustee for the Madoff firm, lawyer Irving Picard, will mail claim forms to the firm's customers by Jan. 9, 2009. Customers may be eligible for relief from the Securities Investor Protection Corp., a securities-industry-funded nonprofit group that can provide as much as $500,000 to customers of failed brokerages. Reuters Report on Madoff New York - Confessed swindler Bernard Madoff faces a Wednesday [Dec. 31] deadline to tell regulators how much he is worth and where his money and other assets are, but it will likely be a longer wait before his investors, seeking to recover billions of dollars, learn the tallies. Investigators from the U.S. Securities and Exchange Commission—which is under fire for missing a purported decades-long $50 billion Ponzi scheme to fleece wealthy individuals and charities alike—will take weeks to pore over the assets, liabilities and property declared by Madoff, 70. A spokesman for the SEC declined comment. In general, the regulator is not required to immediately publicly file such disclosures with the courts. Legal experts said Mr. Madoff, a former chairman of the NASDAQ stock market who was arrested and charged with securities fraud on Dec. 11 Previous Reuters Story, would be better off declaring everything in this early stage of the parallel criminal and civil investigations."I find it hard to believe that he doesn't have anything that is hidden someplace," said Ellen Zimiles, chief executive of Daylight Forensic & Advisory LLC in New York, which works with corporations on compliance. "If he is trying to do the right thing here he should put everything down. If it is found later that he has assets that are not included in that and someone finds them in some other manner, then that is going to be perjury, adding to his troubles." Ms. Zimiles is a former federal prosecutor. On Dec. 18, U.S. District Court Judge Louis Stanton, who is handling the civil case, ordered Mr. Madoff and his Bernard L. Madoff Investment Securities LLC to provide the SEC "on or before December 31 a verified written accounting of all assets, liabilities and property currently held, directly or indirectly." This included bank accounts, brokerage accounts, investments, business interests, loans, lines of credit and "real and personal property, describing each asset and liability, its current location and amount." Mr. Madoff's lawyer—Ira Lee Sorkin, himself a former head of the New York office of the SEC from 1984 to 1986—could not be reached for comment on Tuesday [Dec. 30]. Authorities said in court documents that Mr. Madoff confessed to running a Ponzi scheme with $50 billion in losses. Ponzi schemes are investment frauds in which early investors are paid with money from new clients. Mr. Madoff is under house arrest in his Manhattan apartment on $10 million bail and he has not appeared in court to formally answer the charges. Scores of wealthy people, banks, universities and charities all over the world say they are victims, but the exact amount of money lost is not yet known in what could be the largest fraud in Wall Street history. Finding the money is a priority for investigators who want to recover as much as possible for those apparently duped by Mr. Madoff. On Tuesday, a bankruptcy court judge approved the transfer of $28.1 million to the trustee overseeing the liquidation of Madoff's firm from a bank account held by Madoff or his firm Previous Reuters Story. "This is one of many steps that Trustee Irving H. Picard has taken and will continue to take to collect all available assets of Bernard L. Madoff Investment Securities LLC for the future use of satisfying customer claims and other purposes," the trustee and the Securities Investor Protection Corp. said in a statement. The non-profit SIPC was created by Congress in 1970 to maintain reserves to help investors at failed brokerage firms. The SIPC said it expects it will take several years to find the money in remote locations and sort through investor losses. "We're looking everywhere for all assets," said Richard Bernard, a lawyer representing the court-appointed trustee. A French hedge fund manager, distraught over losing his own and clients' money, apparently committed suicide in his New York office on December 23. "There are a number of rich, angry investors who want to recover their losses," said Douglas Hirsch, a lawyer investigating civil lawsuits on behalf of investors who put their money in funds that in turn entrusted it with Mr. Madoff. Since the Madoff scandal broke, these "feeder funds" have been sued in federal court by people seeking class action, or group status, for those ensnared in the purported fraud. Investors have written to the judge in the civil case asking him to consider broadening access to the SIPC to any investor whose money ended up with Mr. Madoff, even indirectly. "This was an intertwined system of deceit and theft within our financial markets that has left retirees like ourselves having to sell our homes and raise money any way we can," Daniel and Suzanne Goldenson of Bremen, Maine, wrote in a letter to Judge Stanton that was entered in the record.The judge acknowledged the letter without indicating whether he would consider the request, according to court documents. |
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