The Bernie Madoff Ponzi Scheme

2588 WordsJun 17, 201811 Pages
Introduction The Bernie Madoff Ponzi Scheme is a well-known case and is known as one of the biggest Ponzi scheme’s. In summary the scheme occurred for many reasons that I will some up into 3 points; A lack in competency by regulatory agencies, a lack of regulation, and finally a breach in ethics by Bernie Madoff himself. To explain further, the regulatory agencies like the lawyers and SEC are supposed to prevent schemes such as this one from happening but because they lacked the skills to correctly assess the situation, interpreting the number of tips they had received regarding scheme that had been filed, and to act on those in an efficient manner. One of the tips was made by Harry Markopolos in 2000, of who correctly predicted that…show more content…
It takes more than just being honest to instill trust, it also requires that organizations reward honesty and punish dishonesty. This type of culture shows leadership (Galagan 28). Madoff clearly wasn’t showing leadership and his lies eventually caught up with him because he wasn’t rewarding honesty and punishing dishonest. In fact, he was doing the opposite. Truism 2 “Managers should manage in a way that brings good people into the organization and makes good people want to stay. Managers, especially immediate supervisors, largely determine whether employees stay with or leave a company” (Crews). An IT executive, Bob McMahon, noticed the computer systems needed replaced. McMahon believed modern computer systems would help expand business. McMahon was fired because of his ethical behavior. Once Madoff was arrested, McMahon realized the reasoning for Madoff not wanting to replace the existing software. McMahon realized that new systems would have easily found the missing data in the stock trades that never took place (Dodge 27). Therefore, instead of hiring and keeping ethical people in the company, like McMahon, Madoff fired these ethical individuals to continue his scandal without suspicion. Madoff did not want ethical people working for him because they would not be agreeable to his scandal. “In theory Madoff's investing genius consisted of knowing the best time to enter or leave the market. Ostensibly, every so often Madoff's team was
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