False Profits

Beware of false prophets, which come to you in sheep’s clothing, but inwardly they are ravening wolves.  — Matthew 7:15

R-Alabama, Spencer Bachus said that investors are not aware of the differential between brokers, financial planners, broker dealers, investment advisers in how they are

The accounting firm handling Madoff’s 50 billion enterprise was a three-person shop operating out of a storefront. . . .

What is needed is a statuatory and regulatory structure for the 21st century.

Ron Paul said we can’t solve the problem by throwing more regulations and money at the problem.

Yes, that statement was uttered during the House Committee hearings on Bernard Madoff Fraud Allegations & Financial Markets Regulation, today January 5, 2009. Stephen Harbeck, President, Security Insurance Protection Corporation (SIPC) said that some of what people lost were “false profits” when he was questioned by Rep. Gary Ackerman, D-Long Island, NY. Wasn’t caught because gains looked like a steady hand over time rather than spectacular winner. I just couldn’t resist the irony of that homonym.

Brad Sherman, D-Sherman Oaks, CA. Basically, he’s saying 1.5 bil minus what’s lost on Madoff case. Standing behind over 1 trillion in accounts, but 1.5 would wipe them out. The insurance company doesn’t have capital to pay people back.

SEC didn’t correctly handle significant tips it received, what is going to be done?

“It ain’t me, babe,” says David Kotz, SEC Inspector General. He wasn’t sure if regulations were in place to protect the consumer investor. He’s not sure. He says they have to look at this or that, he doesn’t know. It’s pathetic. We need to find out how this could happen. He just looks like a scared bird and kiss ass to me. How could he not know or have seen the red flags. He wants to do an overview? Where were they till now?

“We investigate after the fact.” — Grastley asked sec to do audit of bear stearns, as they may have missed fraud there, but they didn’t.

To my knowledge, there’s no record of any complaint to my SEC office about Madoff. Investigation wasn’t reported to the chairman’s attention. I head office of insp gen, which is separate from the investigation commission. chairman wanted him to find out why the info regarding the madoff investigation was brought from the enforcement to the chairman or other commissions.

Madoff is accused of filing false financial statements for years put forth by a tiny accounting firm. If I die you’re supposed to pay off – finra and fec are supposed to do the fraud finding.

False profits means the losses and gains may be fake. Takes one investor’s money and gives it to another investor’s money, making it look like something is happening.

Forms were filled out, but were they complying with the law? What over orgs that the SEC audits, enforces also might not have had these other [accounting situations/red flags] and are problematic — OR PEOPLE WON’T INVEST. THEY’VE LOST THEIR LIFE SAVINGS.

Madoff put all money into treasuries at end of each month, so could escape being looked at, as it would have been for securities — i.e., therefore, these monies and transfers were not being reported, flew under the radar.

Bloomberg TV Interview with Former SEC Chairman Harvey Pitt prior to 1/05/09 Hearing Focused on SEC’s Role in the Madoff Scandal

Vodpod videos no longer available.

The whole 1/05/08 Madoff hearing, warts n all, from CSPAN. Press play while doing a mindless chore. If anything, I’m leaving it up, because it was a personal technical achievement, my first easily successful vodpod embed. Thank you very much.

Alexandra Penny Story

http://www.cnn.com/2009/CRIME/01/09/madoff.alexandra.penney/index.html?iref=mpstoryview