Echos of Depression I — stock exchange honcho busted
In the wake of the 1929 crash, NYSE chairman Richard Whitney went to
jail. All kinds of fraudulent, ‘watered’ stock had been trading on his
exchange — with his knowledge and approval.
Well, deja vu is
happening all over again. Bloomberg has broken the astounding story of
Nasdaq honcho Bernard Madoff. Buckle your seat belts, cuz the truth is stranger than
fiction. I am not making this up —
Dec. 11 (Bloomberg) — Bernard Madoff, founder and president
of a New York firm that invested funds for wealthy individuals,
hedge funds and other institutions, was charged with operating
what he told employees was a long-running $50 billion Ponzi
scheme in what may be one of the largest frauds in history.
Madoff, 70, head of Bernard L. Madoff Investment Securities
LLC, was arrested today at 8:30 a.m. by the FBI and appeared
before U.S. Magistrate Judge Douglas Eaton in Manhattan federal
court. Charged in a criminal complaint with a single count of
securities fraud, he was released on $10 million bond
Bernard Madoff served as vice chairman of the National
Association of Securities Dealers, a member of its board of
governors, and chairman of its New York region, according to the
SEC Web site. He was also a member of Nasdaq Stock Market’s board
of governors and its executive committee and served as chairman
of its trading committee.
While meeting [a pair of key employees] at his home yesterday, Madoff
conceded that he was “finished,” that his advisory business is
“all just one big lie” and “basically, a giant Ponzi scheme,”
the government said. The business had been insolvent for years
with losses of about $50 billion, he told the employees,
according to the criminal and SEC complaints.
Madoff allegedly confessed to FBI agent Theodore Cacioppi on
Dec. 11, saying there was “no innocent explanation,” the SEC
said in its complaint. Madoff said it was his fault and he had
“paid investors with money that wasn’t there.” He also said he
was “insolvent” and he expected to go to jail, it said.
O … M … F … G. I
have ragged on the Naztrash for a decade as ‘the market that squirrels
shut down.’ [They chewed through a feeder cable in Connecticut back in
the 1990s, and the trading screens went blank.] But I had no concept that
one of the Nasdaq’s elder statesmen was a con, a hooligan and a Ponzi
No worries, though — at least he wasn’t a Federal Reserve primary dealer … right, Ben? Ben, are you still there? HELLO?
I wonder how many cockroaches will be running for the shadows, as others flip the light on and start to realize Wall Street is just one giant Ponzi scheme backed by endless Federal money.