Bernie Madoff Essay

1. What is the ethical issue involved in the Madoff case?

The Madoff case if filled with numerous ethical issues. The case is considered to be the largest scam in our nation’s history. The Madoff case is a great example of how someone who did not care about his profession, as well as the all the personal relationships he had cultivated over the years. Bernie Madoff was involved in a scheme called a Ponzi scheme. Madoff would take money from new investors to pay off the current investor’s dividends. Since Madoff promised unrealistic gains this was the only way to pay his investors. The Ponzi scheme was Names after Charles Ponzi who had tricked investors about a century before Madoff. To keep giving earlier investors their promised return, Madoff had to continually draw new people into the scheme. His family who claim they did not know about the scheme was also involved bringing in new clients to invest with Madoff.
The SEC grew very suspicious after the market lows in 2008 and Madoff’s clients were still getting high return on investment. The SEC who had been investing Madoff exposed and charged Madoff of running a Ponzi scheme. Madoff like Ponzi had a personality that people trusted and handed over millions of dollars to invest. Madoff case was strange in nature since it went on for so long. This case really opened the eyes of many investors and made them take a more active role in their investments.

2.
Do you believe that Bernie Madoff worked alone, or do you think he had help in creating and sustaining the Ponzi scheme?
As intelligent as Bernie Madoff may have been he could not have pulled of the country’s largest Ponzi without some help. The return on investment that constantly beat market averages should have sent up red flags to people inside the company. People within the company such as internal auditors, accounts and other in the internal system should have been really suspicious of the finical reports. Were the people in the Madoff’s office asleep at the wheel? Or was something else not publicized happening behind the scenes? There were just too many intelligent people who worked with Madoff not to see the writing on the walls. Auditing books for a couple of months may not have sent up red flags but the fact the scheme went on for 30 years may say more people were involved. The size of the scheme and the amount of money involved makes it unbelievable and almost impossible that he could have perpetrated a crime by
himself.

3. What should be done to help ensure that Ponzi schemes like this one do not happen in the future?
The Security and Exchange Commission (SEC) is the government body in charge of investigating federal securities fraud. After cases like the Madoffs people always want more regulations but fail to come up with a plan everyone can agree on. More regulations may work but may not necessarily be the answer. The SEC has to help pass smarter legislation that well sends up red flags sooner so these schemes can be stopped. As much as the SEC can do, people are really the key to stopping these schemes before they start. It is up to everyone to stop financial crimes, from the internal auditor that may see fishy finical reports, to the everyday investor who may be getting better than average returns with their investment firms. Before the Madoff case people may not have been so concerned about their high returns and just keep collecting them. Since the highly publicized Madoff case will really make people think twice before they get caught up in a Ponzi scheme themselves. The old adage “if it is too good to be true it probably is” comes to mind when dealing with Ponzi schemes. Investors really have be smart and really know where their hard earned money is going. It will be just a matter of time before another “Bernie Madoff” comes and tries to scam people, however if the SEC and investors are on the same page scams may be stopped before they get started.