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| Tuesday, February 9, 2010 |
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ANALYSIS
March 2, 2009
Sagging Index no longer reflects what’s going on in the market, some say, Replacements? Google it, to start.
March 2, 2009
Downward price spiral will actually boost the cost of capital for most companies. CFOS, take note.
March 2, 2009
The latest bailout at AIG could be a preview of how the president will deal with Wall Street.
March 2, 2009
No corporate defaults. Big debt offerings. Percolating CP issuance. Things may be looking up in the capital markets.
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January 28, 2009 8:53 AM ET
Peter Madoff, the chief compliance officer of Bernard L. Madoff Investment Securities, should be considered for possible criminal prosecution for the firm’s failure to tell regulators that it had an investment-adviser business, a legal expert told a U.S. Senate panel. Columbia University law professor John Coffee, one of the nation’s foremost securities-law scholars, testified Tuesday that Peter Madoff has “to bear responsibility” in part for the firm’s false statements. Peter, younger brother of the firm’s owner, Bernard Madoff, “has a lot to answer for in terms of whether he defrauded’’ the Securities and Exchange Commission and the Financial Industry Regulatory Authority, Mr. Coffee told the Senate Banking Committee. His actions “are within scope of federal criminal law,” Mr. Coffee said. No specific evidence has surfaced showing that Peter knew of the alleged $50 billion Ponzi scheme confessed to by Bernard Madoff in December. But as chief compliance officer, Peter Madoff was responsible for overseeing compliance policies intended to prevent Investment Advisers Act violations at the firm. For decades, the firm repeatedly told FINRA, the self-policing brokerage group, that it was a wholesale market-making firm without customer accounts, acting FINRA chief executive Stephen Luparello said yesterday. It made these statements in regulatory inspections and reports without ever mentioning the advisory business, Mr. Luparello told lawmakers. The regulator never received whistleblower or customer complaints that would cause it to question the firm’s representations, he said. The firm “fundamentally misrepresented the business to us,” Mr. Luparello said. As a result, FINRA never inspected the Madoff firm’s advisory unit or recommended that the SEC do so, Mr. Luparello said. FINRA has jurisdiction over brokers alone, while investment advisers are overseen by the commission, he testified. The alleged Ponzi scheme took place in the firm’s advisory business rather than its brokerage unit. Only in 2006 did the firm notify the SEC that it had an advisory business, though the ongoing federal investigations have determined that it started at some undetermined point before that, Mr. Luparello said. The SEC never inspected the advisory unit, as it routinely checks about 10% of registered advisers every three years, SEC inspection chief Lori Richards said. Oddly, even after 2006, the firm’s statements to FINRA “continued to represent no advisory business in the broker-dealer,” Mr. Luparello said. In the firm’s most recent investment adviser registration, Peter Madoff, 63, is listed as having been chief compliance officer and director of trading since June 1969, according to a copy of the January 2008 filing. He is the only person other than Bernard Madoff listed as an executive officer on the form. Bernard Madoff, 70, is identified as sole owner. Peter Madoff’s attorney, John “Rusty” Wing of New York, did not return a phone message or respond to an email seeking comment. The firm’s most recent adviser registration also said that it had between 11 and 25 clients. Yet Irving Picard, the bankruptcy trustee of the firm, and attorneys with Baker Hostetler have sent letters to 8,000 possible investors. The registration form said that more than half the firm’s advisory clients were hedge funds and other pooled investment vehicles, with the next largest groups being high net-worth individuals and corporations
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