The “System Failure” has found another victim in the alleged $50 bn Madoff scandal.
People are now asking how such a high profile person , once a Nasdaq chairman, could manage to run, now labelled, illegal Ponzi schemes under the very eyes of the regulators. But for the financial market collapse it would perhaps have carried on for ever!
Since early 90s, when Charles Ponzi was associated with originating the most innovative of fraudulent investment schemes offering unusually high returns over a short period out of funds received from new investors, hundreds of such schemes have been exposed in many ways. But the sheer size and reach of the alleged Madoff Scheme seems to engulf the Who’s Who of global banking and investment sector. Banks after banks are coming out with amount of their exposures to Madoff ! (lists so far at FT and Reuters). New victims are still pouring in.
This also again shows that GREED has no limits.
If regulators failed to notice the alleged Ponzi schemes being run by Madoff, the high profile professionally run institutions, hedge funds and sophisticated wealthy investors also failed to notice any wrong doing at Madoff, in anticipation of more than normal returns being offered to them. What happened to all those due-diligence and ‘Know Your Client’ norms which are a nightmare for genuine investors when they go to open accounts with these very institutions??
The nature and scale of financial scandals that has been unfolding since the sub-prime crisis is a significant pointer that not only the systems in place in developed economies totally failed to protect the investors on one side, but also caused irreparable damage to their own financial mechanisms.
This has now been spreading like a virus all across the world with no effective vaccine. This hole has become so big that something like this ($50bn) seems like a drop in the ocean!
