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Decades of Deceit: Bernie Madoff’s Effect on SEC Regulation

By Blake Gattuso, VI Form

Decades of Deceit: Bernie Madoff’s Effect on SEC Regulation

Editor’s Note: This paper was completed as a part of the History Research Fellowship, a one-semester course available to sixth form students.

Seventeen billion dollars lost. Decades of deceit. Bernie Madoff’s fraud forever changed the lives of thousands and impacted the lives of millions.

“It’s a proprietary strategy, I can’t go into great detail,” said Bernie Madoff when he was asked to explain how he made such strong and consistent returns for his investors. This quote from his 2001 interview with Barron’s Magazine held true. Madoff would never go into “great detail” on this topic with anyone. Madoff did not tell investors about the strategy. Not even the Securities and Exchange Commission (SEC) examiners would get “great detail” about Madoff’s multibillion-dollar hedge fund. For more than thirty years, Madoff ran this scheme. And for more than thirty years, Madoff never went into “great detail” with anyone because his hedge fund was a sixty-five billion-dollar Ponzi scheme, not the top-performing hedge fund which it claimed to be.

Trusted capital markets are fundamental to the functioning of the American economy. Stock markets are places where companies raise capital from investors who buy corporate shares. Without these markets, it would be difficult, if not impossible, for the American economy to efficiently allocate capital to productive uses represented in many American, world-leading companies, such as Apple, Google, General Motors, and Boeing. If investors lose faith in these markets and see them as fraudulent, the American economy will suffer. 

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