Interview with Bernard Madoff – organizer of the largest ever Ponzi scheme
Criminals defrauded investors at all times, and it is unlikely that they will ever stop.
This is just one of the observations of Bernard Madoff, contained in a recent interview devoted to the issues of integrity of the financial markets and how investors can protect themselves from fraud, similar to Bernard. He described decades of evasion careful examination by regulators and gullible customers and said that retail investors – less informed market participants.
Madoff gets 150 years for the organization of the largest ever Ponzi scheme, stole billions of dollars of their clients and for decades fooled regulators until he was caught and sent to jail.
After the recognition of the crime Madoff was sent to imprisonment in Correctional Complex in North Carolina. After five years in jail Madoff at the meeting with the journalist Marketwatch looked friendly, relaxed and healthy, despite the oppressive atmosphere of the prison.
During a two-hour conversation Madoff told about the good old days on Wall Street, and friendly meetings with different people, such as the Minister of Finance and CEO Goldman Sachs Bob Rabin, and former head of the Commission on the US Securities and Arthur Levitt.
In prison Madoff do not have access to the Internet, the news, he and 60 other inmates in prison learns of TV viewing is allowed from 2 pm until midnight.
A former climber now spends his days caring for the prison telephone system and computers, and says that friends-convicts called him “Director of Communications”.
Marketwatch talked to Madoff on how to avoid the pitfalls of investors and Wall Street fraud attempts.
Journalist (the F) You’ve worked with the most elite Wall Street firms. How it has changed even before you have started the pyramid?
Madoff (hereinafter M) Individual investor – the last person who has any information. The average investor goes against professional financial firms, hedge funds and professional traders and easily frightened to such an extent that he will leave the market.
Where F is safest to invest in these days in terms of the risk of fraud?
M The best opportunity for the average investor – to invest in index funds. They lower fees and more professional management. This is the safest and least attractive area for crooks. If you want to keep the money from a broker, look for a large company, it is a public company. Most likely, they have appropriate procedures and proper compliance with the law. If regulators checked my company, they would have caught me before. That is the way by which you can avoid exposure to risk their money. Or invest the money in mutual funds, which are large enough to protect its investors.
[Madoff avoided the requirements for disclosure of the regulator on the assets of its fund information by selling existing assets on the eve of the deadline for submission of reports. Madoff also rejected calls for an external audit “on the grounds of secrecy”, claiming that it is the exclusive competence of the responsible officer of the company.]
If you are risk averse, you should buy or munipialnye federal bonds. But you will get 2.5% of revenue, that is below inflation. If you are unsure, you should put your money into a savings account, in the end it’s better than losing money, and they will be safe from fraud attempts.
F What if the company says that the investment is too complex to understand?
M Wall Street is not so complicated. If you ask the average hedge fund or an investment firm as they earn money, they will not tell you. Many people think that this is too difficult, and they can not understand it. You should ask good questions, and if you do not understand something, ask your accountant pozadavat questions.
If you do not understand something, do not invest in it. People keep asking me how I was making, and I refused to answer him, but despite this they continued to invest. My investors are shrewd people smart enough to understand what happened and how to make money. Nevertheless invested, even in the absence of any explanation. What is happening should make sense to you. If you do not understand an investment, do not invest in it.
F As an individual investor to know Wall Street and how it works?
M Read a good book, you will have to educate themselves on the market. People are too gullible investors deception began with the dawn of time, and I do not think he’s coming to an end. Resort to qualified consultants. Previously, there were registered consultants who are trained and qualified in various financial investments. Now this system is not. The greatest danger lurking in cases where financial advisor to motivate manipulation investor behavior in any way.
F Your customers consistently receive good returns for several years. No one realized that it was a pyramid until there was a financial crisis and customers have not demanded my money back. As investors find such fraud?
M If the offer sounds too good to be true, then it is a scam. One of the things that allowed me so long to stay afloat – that’s what I had tremendous credibility. I suggested that 11-12% of income, which was not too unusual at the time. Therefore, no one asked me, and I continued.
F How to be sure that your money is actually invested?
M Periodically ask for your money back. What investors should do is to occasionally ask to return the money, whether it’s a hedge fund or other investment firm. They will try to stop you by saying that once again invest money you can not, if you will bring them, but in fact you are likely to always be able to return. Ask to withdraw all your funds every two years to ensure that they are in order. If my clients did this to me, I would have been caught before.
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