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« WSJ: Ignore the Stock Market (until February) | Main | WSJ: The End of Citi's Financial Supermarket »

December 16, 2008


Jose Roncal

Who would have doubted the integrity of one of the most reputable firms on Wall Street run by an individual that was instrumental in framing the structure of the SEC?

Once again, where were the auditors/accountants? Did it not raise any red flags that the company had reported consistent earnings for the past 20 years? And how could this privately-held company managing that amount of money not be regulated, audited, controlled or provide any safeguards to their so called “investors?”

Apparently the SEC had even received numerous letters from investors trying to sound the alarm that something didn’t smell right. Why was no investigation conducted?

Yes, I understand the secretive nature of Hedge Funds, but will this finally be enough to wake up regulators to change these ineffective oversight rules?

I’ve always maintained that the word “investment” is a misnomer. It’s all speculation. Nothing is really safe. Now the search begins to find the gory details of the billions lost. But what has really been lost is more faith and trust in our financial system. Madoff’s firm had been highly regarded on Wall Street, but trust me, this downfall will just be the tip of the iceberg.

The economic downturn has already caused a run on Hedge Funds and the redemptions have been enormous. Investors cashed out a record $130 billion in November alone. In Madoff’s case, he’d only had requests for $7 billion of redemptions but was struggling to find the liquidity to return funds.

We’ll find out in the next few hours just how serious the collateral damages will be. Early indications are that the actual number of clients is few, but each stands to lose billions. This will not do much to bolster the confidence in the rest of the investment world.

It just drives home the point that there are so many weak links in our financial system, so little government oversight, and too many loopholes that invite under-handed deals.
It will take years to revamp the structure of the system. But I still have a hard time understanding how the watchdogs, the regulators, state auditors, private auditors, accountants, and even the investors can be so blind.

There are tough lesson to be learned, and many questions to be answered. One of the most important and relevant questions we have to ask ourselves is posed in the title of our book, “The Big Gamble: Are You Investing or Speculating?”

This comment was posted by Jose Roncal, co-author of "The Big Gamble: Are you investing or speculating?" - For more information, visit

Kurt Hinz jr

Jose's Comment:
" ...there are so many weak links in our financial system, so little government oversight, and too many loopholes..."

Hahaha, so little government oversight... ouhuh!

Please, regulators are human beings too, they aren't any better than the rest of us...
Does anyone really think that public servants have a special gene or a lack of such one??
L.Mises or M.Friedman among others pointed that out so damn often, it should be obvious.

My (rhetorical) question is this:
Why does the financial sector beg for ((much) more) regulation?
And we all know the answer!
Regards, Kurt.


"except when 0 or 00 come up, which they do once every 19 spins"

Not quite right is it...

D Smith

"Yes, I understand the secretive nature of Hedge Funds, but will this finally be enough to wake up regulators to change these ineffective oversight rules?"

What you fail to understand is Madoof did not run a hedge fund, but a ponzi scheme.... BIG difference. I get tired of hearing him called a hedge fund manager, which he was not. You can blame his outside auditing firm (a very small one I might add) that stayed tight lipped more than you can blame the HF industry. Plus letters had been written to the SEC since 1997 requesting them to look into complaints.

The SEC will shut down a small cap very quickly for a couple complaints, yet Madoof had dozen of complaints with evidence filed and SEC turned their head.

Do we really need "more" regulation or the SEC just to do their job? (which is to protect investors)


MADOFF SHOULD BE IN JAIL AND TRIED FOR THE MURDER OF RENE-THIERRY MAGON DE LA VILLEHUCHET. His life was ruined on epic proportions that most of the population can't wrap their puny brains around and they are so ignorant and small as to begrudges this man his success and have no empathy for his plight. He lost everything and could not go on with such a loss. I get it. I too was taken by a ponzi scheme in 2008 my brother in law was part of.........FAMILY! I only lost 35% of my net worth at $500,000. to witch It will be impossible to recover in my lifetime. My life and my kids childhood is forever hugely changed. It was not greed that brought me to it, it too offered 9-12% witch is NOT to good to be true! , it was good business, but with the wrong person! Financial scams of this proportion need to have much more severe punishment for the titanic carnage and number of lives they have ruined and forever changed and not the small slap on the wrists they have received in the past. Villehuchet killed himself over the criminal actions of Madoff stealing his fortune, NO OTHER REASON and they where friends.
MADOFF SHOULD BE HELD RESPONSIBLE FOR HIS DEATH!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Scott L. Burson

I love it how SEC Chairman Christopher Cox is blaming his staff for not taking action when other hedge fund managers told them Madoff was probably running a Ponzi scheme. It happened on your watch, Mr. Cox! We'd like your resignation on our desk in the morning!

Beyond that, we've gotta make it illegal for any regulator to take a job in the industry they've just been regulating for ten years. A top post at the SEC needs not to be just a stepping-stone to a cushy Wall Street job! Why would any regulator do their job under those circumstances???

Robert Speirs

I heard that there were 5,000 broker-dealers on Wall Street and 10,000 regulatory staff in government jobs "overseeing" - or should I say "overlooking"? - their activities. But I'm sure President never-run-anything-but-his-mouth will make the regulatory machinery much more effective almost immediately, once he figures out how it should work.


When Paul Newman died, they said how great he was but they failed to
mention he considered himself Jewish (born half-Jewish). When the woman (Helen Suzman) who helped Nelson Mandela died, they said how great she was but they failed to mention she was Jewish.
When Ken Lay, Jeff Skilling, Martha Stewart, Randy Cunningham, Gov Edwards,Conrad Black, Senator Keating, Gov Ryan, and Gov Begoivich messed up, no one told me what religion or denomination they were -- because they were not Jewish.
When Ivan Boesky or Andrew Fastow or Bernie Madoff committed fraud, almost every article mentioned they were Jewish.
This reminds me of a famous Einstein quote:
In 1921, Albert Einstein presented a paper on his then-infant Theory of Relativity at the Sorbonne, the prestigious French university. "If I am proved correct," he said, "the Germans will call me a German, the Swiss will call me a Swiss citizen, and the French will call me a great scientist. If relativity is proved wrong, the French will call me a Swiss, the Swiss will call me a German, and the Germans will call me a Jew."


A lot of specialists tell that business loans help people to live their own way, just because they are able to feel free to buy necessary things. Furthermore, banks offer financial loan for different persons.

Barco Botas Timberland

Alemanha: o estoque Grupo Timberland foi classificação "outperform"

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