Comments on: How To Prevent Another Madoff Scandal

By: Burke

Burke — Tue, 20 Jan 2009 20:28:47 +0000

Jim,

I don’t think XRBL is a miracle solution, but I sure think it would have made it so much more difficult for him to cook his books and last that long. Of course, I know no other hedge fund had been able to retroactively replicate his results, which in itself was a good reason to investigate him. And as we know, the SEC has declined investigating his operations multiple times. But the use of an open-source standard like XRBL, and possibly the introduction of legislation warranting mandatory online statements for all financial products, would allow for better client vigilance, and the development of very sophisticated analysis tools. Of course, any client willingly participating in a very secretive and shady operation, is only begging to be defrauded, or for their money to be used for unlawful purposes. Transparency is a two-way street…

That said, I agree his audit firm should join him in jail, as should the software programmers who provided technical support for his scam, and other complicit employees. I’m still baffled that it was his sons who finally denounced him. No whistleblower at Madoff’s…

By: Jim

Jim — Tue, 20 Jan 2009 02:36:20 +0000

C’mon Burke! Do you really think the use of XBRL would have caught Madoff? His two man (very small for a large hedge fund) audit firm deliberatly helped Madoff maintain the fraud. Any junion auditor, still wet behind the ears, could of figured this out. Bernie’s auditors will be going to jail with him.

By: Jim

Jim — Tue, 20 Jan 2009 02:31:48 +0000

I believe that the Peoples Republic of China has the death penalty for fraud. Surely there must be some Chinese bank or investor that was robbed by Madoff. If that is the case, he can be extradited to China for trial and execution. I understand they sell body parts of executed criminals. Perhaps the Chinese can sell his body parts on Ebay to help recover money for compensation of victims. I bet Madoff’s gall would fetch a real good price:)

By: Burke

Burke — Tue, 20 Jan 2009 02:01:18 +0000

I agree with Mark Cuban, and for this matter, SEC’s own chairman Christopher Cox, that the cure to our ailings is more transparency. And transparency, or at least a significant step towards transparency, can be achieved through the use of well defined and open-source standards, like XRBL, that would allow for instant checks and balances, detailed statistical analysis and comparisons, for the sake of audit efficiency and accuracy. Anomalies would be much easier to spot, as would the use of cooked-up software like the one Madoff probably used. What’s more, XRBL could allow unprecedented public scrutiny over government spending.

I’m basically parotting Cuban here, so for the real deal:
http://blogmaverick.com/2008/12/16/the-sec-madoff-and-xbrl/

By: paparay

paparay — Mon, 19 Jan 2009 01:13:38 +0000

Laws, regulations out the whazoo! This will not stop the scoundrels. The only way to protect society is to eliminate them. String ‘em up! Quickly and publicly. Imagine, the jerk sits in his penthouse under “house arrest” while the lawyers fix the game for him. As a former chief of police in LA said once, “you don’t kill a rabid dog to teach other dogs not to go rabid, you do it to protect society.” I know for sure that if you or I stole even $1,000. we would be in jail. He should be also. Oh sure #5, blame it all on Bush. Where was Queen Frank, Dodd, et al, while all this was going down?

By: Knights13

Knights13 — Sun, 18 Jan 2009 23:55:07 +0000

Madoff has become the picture boy of fraud for this year. There are many like Madoff working overtime as we speak.

By: Jim

Jim — Sat, 17 Jan 2009 12:49:49 +0000

Madoff did not perform this huge fraud over decades without help from lots of people-employees, family members, auditors, et al. Why didn’t any of them turn him in? The fact is, no one likes a whistleblower. If the SEC offered lucrative rewards, bounties and prosecutorial immunity in exchange for hard evidence on fraudulent activities, Madoff would have been exposed years ago.

By: Fat Man

Fat Man — Sat, 17 Jan 2009 03:39:04 +0000

“Under Obama, heads will roll, improvements will be made, and prosecutions will increase.”

Clearly satire or the author has not been paying attention, PEBO nominated an SEC lifer to be the chairman. She will do nothing different than what has been done before. That is why she was nominated.

The staff cuts are because the SEC’s cheif source of fees — IPO prospectuses and merger proxies are way off and they don’t need the people who spent their time reviewing such documents.

By: thegre8_1

thegre8_1 — Fri, 16 Jan 2009 21:36:46 +0000

Put Jim Cramer or Larry Kudlow in charge of the SEC if you want reform.

By: Laura Goldman

Laura Goldman — Fri, 16 Jan 2009 20:23:58 +0000

I agree with the importance of an independent custodian and administratior. That is why I did not invest in Madoff in the first place.
Maybe, the SEC should mandate that, but I do not think it ever will.
My whole point is that the SEC needs to be set on fire and be rebuilt from the ground up. It needs to be staffed with market professionals not lawyers.