Last Friday, the SEC published the exhibits for Investigation of Failure of the SEC to Uncover Bernard Madoff’s Ponzi Scheme (Report No. OIG-509). That was 536 separate exhibits tying to fill in the background on what happened with the SEC and Madoff. The one that caught my eye was exhibit 104 that summarized a June...
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You missed the warning signs and got suckered into a Ponzi scheme. The IRS offered some tax relief for long-term Ponzi scheme investors (like some of the Madoff victims) who have paid taxes on gains from the investment. The IRS clarified the federal tax law governing the treatment of losses in Ponzi...
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Florida fund manager Arthur Nadel was indicted Tuesday on criminal charges for allegedly soliciting hundreds of millions of dollars in investor money under false pretenses and misappropriating client funds. Mr. Nadel, 76 years old, was charged in a 15-count indictment with mail fraud, securities fraud and wire fraud. “It’s a much more complex story than...
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Here are a few stories and items that caught my eye this week, but I have not had time to build-out to a full post: SEC Speaks on Compliance Issues to Investment Advisers by Joel Beck of BD Law Blog Lori Richards, the Director of the SEC’s Office of Compliance Inspections and Examinations (OCIE) spoke on...
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There is “rampant Ponzimonium.” Or is there a “virtual Ponzipalooza”? Bart Chilton, a commissioner at the Commodities Futures Trading Commission coined these terms in his speech on March 20 before American Bar Association’s Committee on Derivatives and Futures Law Students. Personally, I prefer Ponzimania. The CFTC has filed charges against 15 alleged Ponzi schemes so far this...
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In the last six and half years the Securities and Exchange Commission has reached settlements with over 300 defendants in cases related to alleged Ponzi schemes. NERA Consulting has been tracking these SEC settlements since the Sarbanes-Oxley Act was enacted in July 2002. In that time frame there have been 12 Ponzi scheme settlements that...
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You missed the warning signs and got suckered into a Ponzi scheme. Can the IRS help by giving you some tax relief? This is a critical issue for long-term Ponzi scheme investors (like some of the Madoff victims) who have paid taxes on gains from the investment. After all, they have been paying real...
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With Madoff, Nadel and Stanford in the news, people are wondering why the government does not prevent Ponzi schemes. The government should protect us from these frauds. How can they? Ponzi scheme sponsors are thieves. Common criminals. They just wear suits instead of black masks. The government has not been able to prevent bank robberies, car-jackings or...
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In an essay in the Wall Street Journal, Stephen Greenspan explains some of the psychology behind the success of Ponzi schemes: Why We Keep Falling For Financial Scams. The basic mechanism explaining the success of Ponzi schemes is the tendency of humans to model their actions — especially when dealing with matters they don’t fully...
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NPR’s Science Friday has an interesting broadcast on Gullibility. Ira Flatow interview Stephen Greenspan, author of Annals of Gullibility: Why We Get Duped and How to Avoid It. Can science explain why some swindles are so successful? Why are some people more likely to try to buy the Brooklyn Bridge or send money to the...
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