he couldn’t, he made multiple detailed filings to the SEC, alleging that Madoff was either running a Ponzi scheme or cheating his brokerage clients to benefit his hedge fund (the November 2005 submission, for example, itemized 29 red flags). The SEC, incredibly, ignored Markopolos... repeatedly. One of the reforms implemented by the SEC in the wake of the Madoff scandal was a whistleblower program, which protects whistleblowers from retaliation and pays awards to whistleblowers based on the size of the fraud uncovered. If this had existed at the time, it wouldn’t necessarily have changed the SEC’s non-response to Markopolos – but it was at least a positive change to improve the odds of uncovering fraud sooner. Subsequently, Markopolos in August 2019 – perhaps with his eyes on the whistleblower prize – alleged that General Electric (GE) was committing nearly $40 billion in fraud
relating in part to its insurance business. So far, no charges have been filed against GE... but, as Markopolos learned from his Madoff experience, fraud can be a long game. Follow your gut – when it tells you not to invest. There are entire chapters of behavioral finance books dedicated to the downfalls of investing with your emotions. “I have a feeling this stock is going to go up” is right up there with “This time it’s different” and “She said she isn’t angry” in the hall of fame of stupid things we choose to believe on the He could have been far wealthier, by many orders of magnitude... meaning plain-vanilla greed wasn’t his motivation. So, why?... Madoff seems to have been motivated by just... well, nothing in particular.
Forensic accountant, and Madoff hunter, Harry Markopolous. Photo: AP
Bernie Madoff, after the fall. Photo: AP
American Consequences
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