Bernie Madoff Case Study

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Despite five significant investigations against Bernie Madoff between 1992 and 2006, regulator lawyers for Securities and Exchange Commission (SEC) produced lackluster efforts and results to prevent Madoff from conducting financial fraud that robbed many individuals, charities, non-profit organization, and educational institutions of their entrusted and invested funds (Shafritz, Russell, & Borick, 2013). In essence it was the SEC that enabled Madoff to further build his Ponzi scheme, which resulted with Madoff defrauding investors of an estimated $65 billion; the eventual downfall of Madoff’s Ponzi scheme resulted with Madoff receiving a 150-year prison term and ordered to repay his investors through restitution (Shafritz, Russell, & Borick, …show more content…
Madoff’s first investigation with the SEC began in 1992 and there were several more investigations opened on him in the following years. With the five investigations opened by the SEC for Madoff, it has been determined that incompetent lawyer regulators were able to identify any “red flags” in any of the evidence submitted to the SEC for review (Rhee, 2009). Based on an article presented by Robert Rhee (2009), he proposed that the “red flags” were blatantly missed due to lawyer regulators not having the industry knowledge, experience, and the competency level needed to identify market trends and abnormalities in derivative calculations and investment transactions. Moveover, Rhee (2009) has identified that “Deep training and experience in accounting and finance are necessary to detect sophisticated market fraud,” such as the type of fraudulent activity Mr. Madoff was enacting in (p. 376). Therefore, Rhee (2009) has presented the notion that lawyer regulators may have the competency in the area of investment law, but they are lacking key sources of education in accounting and finance to adequately perform investigations in the investment and/or financial

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