Madoff says losses of 50 Billion!

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Madoff Told Employees Business Was ‘One Big Lie,’ SEC Says
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By David Scheer

Dec. 11 (Bloomberg) -- Bernard Madoff, president of Bernard Madoff Investment Securities, told employees that his business is “all just one big lie” and “basically, a giant Ponzi scheme,” the U.S. Securities and Exchange Commission said.

In a meeting yesterday at his Manhattan apartment, Madoff, 70, told two senior employees that he was “finished” and had “absolutely nothing,” the SEC said in a civil lawsuit at federal court in Manhattan today. <b>He told the employees his business had been insolvent for years and estimated losses to be about $50 billion</b>, the regulator said.

Madoff said he planned to surrender to authorities in a week, after he distributed some of his remaining $200 million to $300 million to select employees, family and friends, the agency said. He was arrested in a related criminal case today on a single count of securities fraud.
 
This is but the first. He is small fry to what's coming.

Wall St. is a big bucket of pus. 'Returns'.??? They're manipulator, thieves. The public will start to understand before too long, and then we have a martial law situation. No pensions, no jobs, security losses. Nice, real nice.

Market makers. Didn't you wonder why the market rallied? They were buying in. Tomorrow should be very interesting indeed.

777! This is what I've been waiting for. The next names you'll know. Good riddance.
 
Madoff arrested in alleged Ponzi scheme
Ex-Nasdaq chairman, investor charged with securities fraud, FBI says
By Alistair Barr & Ronald D. Orol, MarketWatch
Last update: 7:02 p.m. EST Dec. 11, 2008
Comments: 6
SAN FRANCISCO (MarketWatch) -- Bernard Madoff, former Nasdaq Stock Market chairman and founder of Bernard L. Madoff Investment Securities LLC, was arrested and charged with securities fraud Thursday in what federal prosecutors called a Ponzi scheme that could involve losses of more than $50 billion.
Madoff, 70, of New York, was charged with one count of securities fraud, according to a statement from the Acting U.S. Attorney for the Southern District of New York and the Federal Bureau of Investigation.
The Securities and Exchange Commission filed a complaint in federal court in Manhattan seeking an asset freeze and the appointment of a receiver for the firm run by Madoff.
"We are alleging a massive fraud, both in terms of scope and duration," said SEC Enforcement Bureau director Linda Thomsen in a statement. "We are moving quickly and decisively to stop the fraud and protect remaining assets for investors, and we are working closely with the criminal authorities to hold Mr. Madoff accountable."
An FBI spokeswoman said she didn't know if Madoff has hired an attorney.
Madoff's firm is known as securities broker dealer, but he also runs a separate investment advisory business which had more than $17 billion in assets under management, federal authorities said, citing two unidentified employees and a Securities and Exchange Commission filing.
<b>Madoff counted several large hedge fund investment firms as clients, along with some European banks, so if his firm has lost more than $50 billion, the impact could be widespread. </b>
On Wednesday, Madoff told two senior employees that he was "finished," that he had "absolutely nothing," that "it's all just one big lie," and that it was "basically, a giant Ponzi scheme," federal prosecutors said in their statement.
Madoff also said his business was insolvent, and that it had been for years, estimating losses to be at least $50 billion, prosecutors alleged, again citing the two unidentified employees.
 
Cramer: Madoff Cuffed, but Damage Not Done

12/11/08 - 07:03 PM EST

Jim Cramer

Just what this market needed: the highest profile hedge-fund scandal I may have ever seen -- Bernie Madoff's arrest today. This guy ran $17 billion for the wealthiest of the wealthy and the most clued-in of customers. $17 billion! As my friend Doug Kass says, this one is bigger than Bayou -- heck, bigger than Boesky.

When Boesky got busted, there was an instant backlash by the public against the securities markets -- people figured they were rigged and then they got confirmation.

With the nonsense we see daily with the Exxons and the Chevrons and the JP Morgans and the Goldmans and the last hour of trading with the Pro Ultra ETFs, it is easy to believe that things can be rigged and I believe they are in a bizarrely legal way blessed by the SEC.

But this is obviously different. It's a gigantic Ponzi scheme, he allegedly told his employees, and that means still more billions of dollars that are lost.

Yep, when the size of this is fully revealed, Doug says, it could be $50 billion!

Those kinds of numbers will get bandied about, people will be scared and there will be one more justifiable move to the exits.


I did not know Madoff. I only knew him as a market-maker on the Nasdaq that I didn't use. I didn't even know he managed so much money. It's like he did it all under the radar screen. When it hit the headlines, I just said, "There goes a guy that didn't matter that much."

I was wrong. It's not under the radar screen now. It's a gigantic green mass on the screen and its heading right for the psyche of this frail market.

I just hope for the bulls' sakes that the buyers of Exxon (XOM Quote - Cramer on XOM - Stock Picks) and Texas Instruments (TXN Quote - Cramer on TXN - Stock Picks) and Potash (POT Quote - Cramer on POT - Stock Picks) are back in action tomorrow. They will need to be.
 
How is the 50 Billion considered a loss?

From what I read, Madoff juiced the spread in his market making business to defraud 50 Billion from inflated execution costs.

Could be wrong.
 
Quote from achilles28:

How is the 50 Billion considered a loss?

From what I read, Madoff juiced the spread in his market making business to defraud 50 Billion from inflated execution costs.

Could be wrong.
More...

Thats not what the news reports are saying. It looks like the his entire asset management biz with about $17bil was one big ponzi scheme and only a couple hundred million is left. Not sure where the $50 billion number is coming from though.
 
Quote from western:

Thats not what the news reports are saying. It looks like the his entire asset management biz with about $17bil was one big ponzi scheme and only a couple hundred million is left. Not sure where the $50 billion number is coming from though.
More...

Yea, it seems to be both inflated execution and ponzi.

From Bloomberg concerning the SEC suit against Madoff:


“The exchanges didn’t like the practice and questioned whether customers got the best price,” Angel said.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a91j6qGRfE3k

And in the same article related to ponzi-allegations:

The SEC in its complaint, also filed today in Manhattan federal court, accused Madoff of a “multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm.”

The SEC said it’s seeking emergency relief for investors, including an asset freeze and the appointment of a receiver for the firm
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a91j6qGRfE3k


Also, the reports are classifying the Billions as losses.
 
Quote from flytiger:

This is but the first. He is small fry to what's coming.

Wall St. is a big bucket of pus. 'Returns'.??? They're manipulator, thieves. The public will start to understand before too long, and then we have a martial law situation. No pensions, no jobs, security losses. Nice, real nice.

Market makers. Didn't you wonder why the market rallied? They were buying in. Tomorrow should be very interesting indeed.

777! This is what I've been waiting for. The next names you'll know. Good riddance.
More...

Flytiger,

Can you explain this for me? The structure, the scam, where the losses are taken?
 
Madoff, 70, the founder of Bernard L. Madoff Investment Securities LLC, maintained a separate and <b>secretive investment-advising business that served between 11 and 25 clients and had a total of about $17.1 billion in assets under management</b>, prosecutors said.

At least 50 percent of its clients were hedge funds, and others included banks and wealthy individuals, according to the records.
 
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