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The Collapse of the Madoff Pyramid Essay

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Our economy has been built upon for decades creating growth within the business industry. Businesses provide jobs, finances, and security for individual’s within society and is a main source of what defines our prosperous country. Every business has an ethical responsibility to its members and employee’s and to society at large. Ethical responsibility is a major component in which society needs to reinforce because it helps create principles, values, and standards, all of which help to guide a person’s behavior (Ferrel et al. 2013). Ethics help to create balance which in turn will have positive results for the business versus negative results. It seems that no matter where we look today, companies like Enron, WorldCom, AIG and many, many …show more content…

Madoff had an exaggerated feeling of self-importance. In understanding how he became unethical within his business, it is important to gain insight into the history of the business and its impeccable growth. Madoff opened his firm, Madoff Investment Securities, in 1960 (The Madoff). The firm began honest growth when his father-in-law Saul Alpern, joined to the firm as an accountant. During this time, there were a plethora of competing firms on the New York Stock Exchange, so to gain a competitive edge, Madoff‘s firm began using innovative computer information technology to disseminate its quotes. The technology his firm developed proved to be so successful, that it became the NASDAQ (Weiner). The development of this technology provided the firm with exceptional income and drove his firm to become one of the most successful on Wall Street. Unfortunately, the firm’s success was not enough for Madoff and in the early 1990’s he transitioned from an influential trader to a fabricator of returns by creating the largest Ponzi scheme in history. Madoff claimed to combine blue chip securities with derivatives to hedge risk, which provided rock solid and steady returns, even in down markets. This easily sold his client into investing significant amounts of money, and for some, their life savings. What Madoff’s investors did not realize was that, in reality, the returns for current investors perpetuated by acquiring funds for new

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