SEC Charges Bernard L. Madoff for Multi-Billion Dollar Ponzi Scheme (Press Release 2008-293)

Claims Supported by This Source

1. On December 11, 2008, the SEC sued Madoff and BLMIS for securities fraud in federal district court (Manhattan), seeking emergency relief, including an asset freeze and the appointment of a receiver for the firm.
2. According to the complaint, on the previous day (December 10), Madoff told two senior employees that his investment advisory business was a fraud, stating, "it's all over," "there is nothing left," "it's all one big lie," and "basically, a giant Ponzi scheme." The employees understood that for years, profits to certain investors had been paid out of the principal of other investors. The firm had been insolvent for years, and Madoff himself estimated the losses to be at least $50 billion.
3. Filings with regulators showed over $17 billion in assets under management as of early 2008. It was announced that virtually all assets in the investment advisory business were missing.
4. Madoff founded his firm in 1960 and served as Vice Chairman and a member of the Board of Directors of the NASD, and as a member of the Board of Directors, Executive Committee, and Chairman of the Trading Committee of NASDAQ.
5. The charges were for violations of the anti-fraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940. Attached were the December 12 asset freeze order and the December 18 preliminary injunction.

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