No One Would Listen
Title: No One Would Listen: A True Financial Thriller
Author: Harry Markopolos
Publisher: John Wiley & Sons, Inc., 2010
ISBN: 978-0470553732, 376 pages
Review: No One Would Listen
By Patrick Brigger, getAbstract
When Harry Markopolos began his career in the securities industry, his bosses wanted him to create investment instruments that competed with those offered by financier Bernie Madoff. When Markopolos found that Madoff's results were impossible to match, he suspected that Madoff was running a Ponzi scheme (not investing money, but paying each investor with cash from other investors).
His suspicion led to an investigative odyssey. Markopolos and his team uncovered not only the largest financial fraud in history, but also a dangerously dysfunctional U.S. regulatory system. In this book, Markopolos recounts his frustrating, thwarted efforts to warn the Securities and Exchange Commission (SEC) about the threat Madoff posed to unwary investors. The SEC failed to respond to his detailed written evidence, though Markopolos submitted it five times, starting in 2000--long before Madoff finally confessed in 2008. getAbstract recommends this engrossing book to readers who want to learn more about this epic scandal and its implications for financial industry regulation.
The Biggest Financial Crime Ever
In December 2008, as Harry Markopolos prepared to bring his kids home from karate practice, he noticed several voice messages on his cell phone. All his callers had the same shocking news: Wall Street legend Bernard Madoff, former chairman of Nasdaq, was under arrest for running a fake investment fund. His Ponzi scheme had collapsed in the wake of the global financial panic.
The arrest vindicated years of Markopolos's efforts to end Madoff's financial ruse and to prevent investors from handing him more money. By the time his crime spree ended, Madoff had attracted investors around the world, from major financial institutions and charitable organizations to families in the New York and Florida Jewish communities to descendants of European nobility. His investors responded to the 2008 economic meltdown by rushing to redeem their investments with Madoff; and before long, his fake fund was empty. In the end, he stole an estimated $65 billion from investors - the largest financial fraud in history.
The SEC's lack of response and its dismissive treatment of Markopolos were as shocking as the breadth of the fraud. Markopolos submitted written evidence of Madoff's crimes to the SEC five times and received virtually no response. Many investment industry professionals doubted the veracity of the evidence against Madoff, an avuncular philanthropist with a genteel demeanor. But he fooled neither Markopolos nor his investigators, who were determined to develop and disseminate proof that Madoff was a financial criminal on an unprecedented scale.
A Knack for Finding Fraud
From a young age, Markopolos demonstrated a talent for solving mathematical problems and a gift for spotting fraud. He once worked as the assistant controller of his family's group of 12 fish-and-chips restaurants. He identified a staffer who was stealing food at one restaurant by carefully analyzing changes in the inventory at all 12 locations. Instead of firing him, Markopolos reduced the thief's working hours until he quit. This tactic steadily pared the losses and kept the ex-worker from filing claims for unemployment compensation at the family's expense. By the early 1990s, Markopolos was on a career path in the securities industry. After working at other investment firms, he joined Rampart Investment Management in Boston. At Rampart, he began his long-running investigation of Madoff and his discouraging struggle to convince the SEC that the venerable Wall Street leader was not what he appeared to be...
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