Former NASDAQ Chairman Arrested in Multibillion Dollar Ponzi Scheme

NEW YORK - Bernard L. Madoff, the founder of Bernard L. Madoff Investment Securities LLC, a registered investment adviser, and former Chairman of the NASDAQ Stock Market, was arrested and charged with one count of securities fraud. According to the complaint filed in Manhattan federal court, Bernard L. Madoff is the founder of Bernard L. Madoff Investment Securities LLC (the Firm), a securities broker dealer with its principal office in New York City. According to the Firms website, the Firm: (a) is a leading international market maker. The firm has been providing quality executions for broker-dealers, banks and financial institutions since its inception in 1960; (b) [w]ith more than $700 million in firm capital, Madoff currently ranks among the top 1% of U.S. Securities firms; and (c) Clients know that Bernard Madoff has a personal interest in maintaining an unblemished record of value, fair-dealing, and high ethical standards that has always been the firms hallmark. According to two senior employees of the Firm (the Senior Employees), Madoff conducts certain investment advisory business for clients that is separate from the firms proprietary trading and market making activities. According to the Senior Employees, Madoff ran his investment adviser business from a separate floor in the New York City offices of Bernard L. Madoff Investment Securities LLC. According to a Senior Employee, Madoff kept the financial statements for the firm under lock and key, and Madoff was cryptic about the firms investment advisory business. According to a document filed by Madoff with the U.S. Securities and Exchange Commission (SEC) on Jan.7, 2008, Madoffs investment advisory business served between 11 and 25 clients and had a total of approximately $17.1 billion in assets under management. On Dec. 10, 2008, Madoff informed the Senior Employees, in substance, that his investment advisory business was a fraud. Madoff stated that he was finished, that he had absolutely nothing, that its all just one big lie, and that it was basically, a giant Ponzi scheme. Madoff stated that the business was insolvent, and that it had been for years. Madoff also stated that he estimated the losses from this fraud to be at least approximately $50 billion. Madoff further informed the Senior Employees that, in approximately one week, he planned to surrender to authorities, but before he did that, he had approximately $200-300 million left, and he planned to use that money to make payments to certain selected employees, family and friends. Madoff, 70, currently resides in New York City. The securities fraud charge in the complaint carries a maximum penalty of 20 years in prison and a maximum fine of $5,000,000.