Madoff

Bernie Madoff's Son Mark Worked For New SEC Head

Andrew Madoff, Bernie Madoff, Madoff, Mark Madoff, Obama, Peter Madoff, Schapiro, SEC

New SEC chief gave Bernard Madoff’s son a job

Rosie Lavan
TIMES ONLINE
mad-money

Mary Schapiro, Barack Obama’s choice to lead the Securities and Exchange Commission (SEC), previously appointed one of Bernard Madoff’s sons to a regulatory body that oversees American securities firms.

It has emerged that in 2001, Ms Schapiro, currently chief executive of the Financial Industry Regulatory Authority (Finra), employed Mark Madoff to serve on the board of the National Adjudicatory Council — the division that reviews disciplinary decisions made by Finra.

Mr Madoff is under house arrest in his $7 million Manhattan apartment and will be electronically tagged after he failed to secure further signatories to guarantee his $10 million bail.

Both sons have emphatically denied any involvement in what could be the biggest fraud perpetrated by an individual.

However, the link with Mark Madoff may prove controversial for Ms Schapiro and the President-elect, who has moved fast to replace Christopher Cox, the current head of the SEC. The watchdog has came under fire for failing to detect Mr Madoff’s activities.

Earlier this week, Mr Cox admitted the regulator had repeatedly failed to follow up on tip-offs about Mr Madoff’s business dealings.

At the time of Mark Madoff’s appointment, Ms Schapiro was serving as president of the National Association of Securities Dealers (NASD), according to the Wall Street Journal, which was consolidated with the New York Stock Exchange Member Regulation in 2007 to form Finra.

She has served as a commissioner of the SEC under three administrations since the 1980s: President Reagan appointed her in 1988, she returned for the first President Bush in 1989, and she was named acting chairman by President Clinton in 1993.

Ms Schapiro chaired the Commodities Future Trading Commission in the mid-1990s, during the downfall of Barings Bank, and first joined NASD in 1996 as president of regulation.

Mr Madoff was himself closely involved in NASD, the self-regulatory organisation for brokers and dealer firms, in the 1970s.

The NASD went on to found Nasdaq, the screen-based equity exchange, in 1971, and Mr Madoff became its chairman in 1990.

Mark Madoff began working at his father’s firm, Bernard L. Madoff Securities, in 1986. He was the third member of Mr Madoff’s family to join the business, following his uncle, Peter Madoff, and his cousin, Charles Wiener, son of Bernard’s sister, Sandra. Andrew Madoff, his younger brother, followed in 1988, and Roger and Shana, children of Peter Madoff, joined in the 1990s.

It emerged yesterday that Shana Madoff’s relationship with her husband, Eric Swanson, is at the centre of an SEC probe. Mr Swanson is a former SEC attorney.

In a profile of the Madoff family, published in 2000, Mark Madoff said: “What makes it fun for all of us is to walk into the office in the morning and see the rest of your family sitting there. That’s a good feeling to have. To Bernie and Peter, that’s what it’s all about.”

Last week, Mark Madoff, with his brother, Andrew, were understood to have approached the authorities after their father apparently confessed to orchestrating a $50 billion securities fraud.

Dodd Seeks Details on How SEC Missed Madoff’s ‘Massive’ Fraud

Hedge Funds, Madoff, Wall Street

Bloomberg

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By Jesse Westbrook and John Tucker

Dec. 16 (Bloomberg) — Bernard Madoff’s financial records were “utterly unreliable” and will take six months to sort out, said Stephen Harbeck, president of the Securities Investor Protection Corp.

“There are some assets, but I have no idea what the relationships of the assets available are to the claims against them,” Harbeck said on Bloomberg Television. “The records are utterly unreliable on this case.”

His comments came as Bank Medici AG of Austria became the latest lender to reveal a loss from Madoff’s alleged $50 billion fraud. Two funds at the Viennese bank, 75 percent owned by Chairman Sonja Kohn, invested $2.1 billion entirely in Madoff’s firm, the bank said today. It joined institutions and wealthy individuals from Tokyo to Paris. New York’s Yeshiva University lost as much as $140 million, the student newspaper said.

U.S. Senate Banking Committee Chairman Christopher Dodd, meantime, told the Securities and Exchange Commission to explain how it failed to detect the “giant Ponzi scheme.”

Dodd, a Connecticut Democrat, “is seeking more information from the SEC about this case,” Kate Szostak, the senator’s spokeswoman, said in a statement late yesterday. “Senator Dodd is concerned not only about the people caught up in this reported scheme who may have been misled, but how such a massive fraud could have gone undetected.”

2005 SEC Review

Madoff, 70, was arrested Dec. 11 after he told his sons that Bernard L. Madoff Investment Securities LLC was a “giant Ponzi scheme,” the SEC said. Clients facing losses range from a Fairfield, Connecticut, pension fund to hedge funds and New York Mets owner Fred Wilpon’s Sterling Equities Inc.

The SEC hadn’t inspected Madoff’s investment advisory business since he registered the firm with the agency in September 2006, two people familiar with the matter said. The SEC tries to inspect advisers at least every five years and to scrutinize new firms in their first year of registration, former agency officials and securities lawyers said. Harbeck’s SIPC is liquidating the firm.

SEC examiners reviewed Madoff’s brokerage business in 2005 after an investment manager, writing to the agency, and press reports questioned the validity of his investment returns. The SEC’s enforcement division completed an investigation involving the company last year without bringing a claim.

Peter Madoff Subpoenaed

One of Madoff’s sons, Peter Madoff, was today subpoenaed by Massachusetts Secretary of State William Galvin, according to a copy of a court filing. The son was chief compliance officer at Madoff’s firm, the filing said. Galvin is also seeking documents from Marcia Beth Cohn, chief compliance officer of Cohmad Securities Corp., located at the same address as Madoff’s firm, the filing said.

Galvin became involved after Tremont Group Holdings Inc., a hedge-fund firm owned by Massachusetts Mutual Life Insurance Co., revealed that it had $3.3 billion invested with Madoff. The investment amounted to more than half Tremont’s total assets, a person familiar with the matter said.

The SEC was already under fire before Madoff’s alleged fraud came to light. The collapses of investment banks Bear Stearns Cos. and Lehman Brothers Holdings Inc. this year tarnished the SEC’s reputation and lawmakers such as Dodd and Senator Charles Grassley, an Iowa Republican, have questioned its vigilance in enforcing securities laws.

SEC spokesman John Nester didn’t return a phone call and e- mail seeking comment.

Separately, Madoff made $182,250 in campaign donations since 1993 to federal candidates, the political parties, and securities industry’s political action committee, according to the Center for Responsive Politics. He gave $100,000 to the Democratic Senatorial Campaign Committee, including $25,000 in September. He contributed to both Democratic and Republican members of Congress.