The Illegal and Unethical Activities of Bernard Lawrence "Bernie" Madoff
Bernard Lawrence Madoff, a former chairman of the NASDAQ Stock Market and founder of Bernard L. Madoff Investment Securities, was one of the few NASDAQ market-makers who competed with the New York Stock Exchange, by trading stocks listed on the Big Board. Through the Cincinnati exchange, the Madoff was a pioneer in electronic trading and publicly spoke of the need to use technology to transform the inefficient and sometimes shady over-the-counter stock market (Monica Gagnier, 2008). But Madoff became famous for a very different reason on December 10, 2008 when Madoff 's sons told authorities that their father had confessed to them that the asset management unit of his firm was a massive Ponzi scheme. On March 12, 2009, Madoff pleaded guilty to 11 federal felonies, including securities fraud, wire fraud, mail fraud, money laundering, making false statements, perjury, theft from an employee benefit plan, and making false filings with the SEC.
1. Describe three types of illegal business behavior alleged against Mr. Madoff and for each type of behavior, explain how the behavior is illegal or unethical in the conduct of business. With all the felonies Madoff was charged with I believe that they are all illigal and unethical. First he was running one of the largest Ponzi schemes in history which entices new investors by offering returns other investments cannot guarantee, in the form of short-term returns that are either abnormally high or unusually consistent. The perpetuation of the returns that a Ponzi scheme advertises and pays requires an ever-increasing flow of money from investors to keep the scheme going (Ponzi scheme, n.d.). Second he was conducting securities fraud which includes outright theft from investors and misstatements on a public company 's financial reports (Securities Fraud, n.d.). Fraud is a violation of one’s trust and it deceives someone into willingly giving you something under false pretenses. Fraud is unethical and illegal because
1. Describe three types of illegal business behavior alleged against Mr. Madoff and for each type of behavior, explain how the behavior is illegal or unethical in the conduct of business. With all the felonies Madoff was charged with I believe that they are all illigal and unethical. First he was running one of the largest Ponzi schemes in history which entices new investors by offering returns other investments cannot guarantee, in the form of short-term returns that are either abnormally high or unusually consistent. The perpetuation of the returns that a Ponzi scheme advertises and pays requires an ever-increasing flow of money from investors to keep the scheme going (Ponzi scheme, n.d.). Second he was conducting securities fraud which includes outright theft from investors and misstatements on a public company 's financial reports (Securities Fraud, n.d.). Fraud is a violation of one’s trust and it deceives someone into willingly giving you something under false pretenses. Fraud is unethical and illegal because
References: Monica Gagnier, December 12, 2008. The Rise and Fall of Bernard L. Madoff. Retrieved from http://www.businessweek.com/blogs/recession_in_america/archives/2008/12/the_rise_and_fa.html Wikipedia, the Free Encyclopedia, n.d. Ponzi Scheme. Retrieved from http://en.wikipedia.org/wiki/Ponzi_scheme Wikipedia, The Free Encyclopedia, n.d. Securities fraud. Retrieved from http://en.wikipedia.org/wiki/Securities_fraud Andrew Clark, March 11, 2009. Bernard Madoff Faces Potential 150 Years in Prison After Lawyer Cconfirms he is Likely toPleadGuilty. Retrieved from http://www.guardian.co.uk/business/2009/mar/11/bernard-madoff-charges The Wall Street Journal, March 6, 2009. Madoff’s Victims. Retrieved from http://s.wsj.net/public/resources/documents/st_madoff_victims_20081215.html The Wall Street Journal, December 8, 2010. Madoff Kin, Global Banks Sued for Funds. Retrieved from http://online.wsj.com/article/SB10001424052748703493504576007573995366008.html?mod=WSJ_hp_LEFTWhatsNewsCollection Wikipedia, The Free Encyclopedia, n.d. Bernard Madoff. Retrieved from http://en.wikipedia.org/wiki/Bernard_Madoff