“Bernard Madoff and the Largest Financial Scam in History”

Bernard Madoff founded Bernard L. Madoff Investment Securities in 1960, with an investmento of only $5,000 earned as a beach lifeguard and a lawn sprinkler installer. He was seen as a genius and the most sympathetic and friendly broker in the country. Madoff became the responsible for the largest financial scam in history after applying the most jaded of financial scheme. A stroke of billions of dollars and harmed many customers. But after 20 years of this scam, he admitted having ridden a giant pyramid scheme type after being arrested. The scheme is to pay older clients with money from new investors, without producing real income. Madoff even became chairman of Nasdaq, the stock of technology companies, which offered steady returns of 10% to 12% per year on invested capital, regardless of the ups and downs of the market. Not even the economic crisis had hit their doors: their investments grew by 5.6%, while the market value of the companies in which he allegedly invested had shrunk 37.7%. The scheme started to crash when customers were having had times due to the crisis and wanted to withdraw $ 7 billion. After that the scheme crashed completely and Madoff told his sons that it was all "one big lie" and that they had to go and tell the authorities. In the same afternoon, Madoff was arrested for the first time. Madoff states that no member of his family or any other person knew of the scam, but more people got arrested because of this scheme.
In my opinion, I believe Madoff case has a lot to do with psychological problem, and after he realized he was doing great, becoming successful more and more every day, he believed he was invincible and never someone would discover his scam. Madoff says in his statement, “When I began the Ponzi scheme I believed it would end shortly and I would be able to extricate myself and my clients from the scheme. However, this proved difficult, and ultimately impossible, and as the years went by I realized that my arrest and this day would inevitably come”, and no doubt he would be in trouble anyways after the first years of the scam. Many of us believe that we are different, invincible, that things will never happened to us, and in parts that’s a good way of thinking but in certain situations, especially those that involve money, may be complicated, which I believe it was the case of Madoff. As much as he was making, as much he wanted to continue.
Madoff became well known and successful, and such qualities were the way for new ones. He was a highly respected, well-established and esteemed financial expert and after years his reputation was secure and wide. Madoff was an intelligent person and at the same time he was running the scheme in one floor, he also had a legitimate business running in the lower floor. The companies had different accounts, were kept as secret and Madoff would not give satisfaction to clients on investment performance, and due to its credibility in the market, few investors questioned its working methods.
As part of the overall meltdown and how to introduce such finacial scham in today’s classes, I believe it’s a good example that imperfections, failures, errors are everywhere. That companies such as the Securities and Exchange Commission (SEC) could have done a better job and realize that something was wrong at least few years earlier. Twenty years is a long time for a finantial scham and that certainly affected a lot of people.
According to an article from Forbes, by Edward Siedle, charities have not learned much after Madoff scham. “Charities continue to pile into high risk, high cost, opaque investments, such as structured notes, hedge funds and private equity and are prone to be victimized by other investment scams because they have failed to acknowledge and address the unique vulnerabilities related to managing the investment portfolios of these types of organizations. Charities are subject to unique pressures, especially with respect to their investments.” It’s hard to give an advice against a scheme that apparently is going well. For an individual or an organization, we tend to follow and learn from other’s success, and after such scam we would imagine that investors have their eyes opened for where to invest their money.