Chaitman on Madoff
The significance of Bernard Madoff is not the man himself, although he clearly mastered and controlled the world in which he operated for decades. Madoff’s significance is that he exposed the flaws in the American regulatory and legislative system.
- The utter incompetence of the Securities and Exchange Commission to police the securities markets.
- The total control over the securities markets by the financial services industry.
- The manipulation of the American investor by the financial services industry, whereby naive investors were induced to allow brokerage firms to hold their securities in street name, thereby allowing the brokerage firms to generate huge profits for themselves and, at the same time, expose investors to the risk that a dishonest broker will steal their securities or steal their money and never purchase the securities.
- The failure of the SEC to step up and acknowledge its own incompetence.
- The total abrogation by the SEC of its moral responsibility to account for its own failures.
- The refusal of the SEC to fulfill its statutory mandate to require the Securities Investor Protection Corporation to comply with the Securities Investor Protection Act for the protection of investors.
- SIPC’s expenditure of approximately $2 million/week in professional fees in the Madoff case where the professionals are charged with the primary goal of denying SIPC insurance to thousands of elderly investors solely in order to enrich SIPC’s members, the financial services industry.