Madoff used his position to dupe investors into channeling their money into his Ponzi scheme leading to them losing a lot of money. Securities Exchange Commission (SEC) did little to prevent the crisis and there is need for reforms when it comes to regulating the corporate sector to avert such occurrences in future
The idea behind his unscrupulous operations was to attract new clients’ investment while ensuring that there was no sudden outflow of cash from the operations (“The Madoff Affair”). Therefore, he was able to pay profits to earlier investors with funds from more recent investors. The investors thus lost their money as they thought that the profits were a result of their investments which were actual non-existent. He also intimidated inquisitive clients through his partner Frank Di Pascali.
The SEC did not give Madoff and his activities the attention they deserved. Though he was an unregistered, Madoff served thousands of clients and managed billions of dollars. Indeed, the body was complacent as it failed to carefully investigate the intrinsic operation of Madoff’s business yet it received several complaints about his fraudulent activities. Additionally, it failed to follow whistleblower Harry Markopoulo’s memos on the fraud and assumed Madoff’s scrupulousness based on his 40 years of experience in the stock (“The Madoff Affair”). As such, I hold the government, through the SEC, accountable for the Madoff affair.
Business practices should be reformed and harsh punishments be imposed on those implicated in corporate crimes to avoid such incidents from recurring. For example, businesses should be transparent. Moreover, the regulatory bodies such as SEC should be equipped with modern technology, undertake data reforms, and be well-staffed to fight unethical business practices. Bernie Madoff deserves the lengthy jail sentence as he caused sorrow and financial distress to families.
Madoff managed to defraud his investors thanks to the complacency of the SEC. He deserves the sentence he received because of the great harm his actions caused.
“The Madoff Affair.” Public Broadcasting Service, https://www.pbs.org/video/frontline-the-madoff-affair/.