ProPublica.org reports that Bernard Madoff's nemesis, Harry Markopolos, an independent fraud investigator and derivatives expert, tried in 1999 to replicate the returns on the Madoff mix of investments and found it impossible after several of his clients asked for comparable investments. Markopolos approached the SEC in 1999, 2001, and again in 2005 with analysis that questioned the validity of the Madoff formula.
His nineteen page 2005 submission is called "World's Largest Hedge Fund is a Fraud," and contains 29 "red flags." A link for download was posted yesterday and is also available on ProPublica's webpage.
The SEC's opening and closing report has been posted by the Wall Street Journal and is available for download on ProPublica.org.
The SEC concluded that there was no evidence of fraud. But it never subpoenaed anything from Madoff.
When greed has been listed as a deadly sin for thousands of years, what led to the delusional belief that the financial markets could self-regulate?
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