global financial risk, which started in 1987, when it is within sms from their funds in spite of long-term being strategies de protectes I Discla questions for the report Discuss the right of the lone scheme and low Malufolio 2 Discuss at least two relevant compte genance paktelines that were place that time in the US that could have stopped Me Why we Modern practice no de carr20 Which corporate governance they do you think will apply this user Dace Geory in relation to this case (20%) 4. Were they new guideline put into place after the Madoff onda ime corporate governance guidelines that can lead in from ruchschmeris the future0%. Presentation recture, clarity and reference 2016 Bernie Madoff's Polscheme Itemie Madoff, 73, a pustchiman of the Nadatok exchange was a pillar of Wall Street A member of elite country clubs in Palm Beach and long and he was respected and admired by financial institutions and rich individuals in America and Europe. In December 2009, he was charged with fraud by operating giant Pischone over 17 years. Such scheme wie incoming investment to pay existing events and dividend and to refund investments when requested. Clearly soch scheme binge en rising share prices and ever increasing investment in the fund. The recession put an end to all that. Matera brokerage business from three flour office in mid-rwn Manhattan, but that turned out to be just from for the Porscheme. In March 2009, he pleaded guilty to froid and faces the row of his life is His fund recorded at least 5 billion worth of assets invested for some 5,000 clients Les than a billion has been recovered his investors included hedge funds, mouls, Swiss banks, and charities, as well as individual rich investors Santander Hank has offered 14 bilion euros to customers for savings wivested on their behalf in the Mader und Other hanks a lot money including HSBC, Royal Bank of Scotland HBO case in this collection of cases and BNP Paribas. The hedge fund Man Copier case in textbook) has brought an action to recover 360 million There had been warning signs. Son had oggeted that the funds returns were to consistent given market movements, others that soch tumor could not be camed by the strategy Made claimed to follow Nevertheless, the SEC (US Securities and Exchange Comfuled to detect the wall over many years, even though allegedly they had had warningslina whistleblower In the United States, the SEC, the FBI, and the US Army General were involved in the vestigations in the UK the SFO Ses Fred Office investigated Models Londen office. Malo'tar David Frichling 49, a sole practitioner in to New York and Madoff's brother-in-law were also been prosed Madoff was tried and is bow VIR 150 year cet apre in North Carolina Searches were made for funds held by Madoff or members of his family but there was title chance of significant restation Madoff's victims included Hollywood stars millionaire hedge fund men, and milde class persisten to the Jewish communities in Florida New York. Mader od nowymy, became as he explained all his clients had declared that they had mough wealth to withstand ning losses Why did people wim? Perhaps because they were impressed by his credente thecae they were inced by other investors who trusted tim, maybe they are the w were so that he had have sider Information and they wanted to join Ainthe Loode Times (22 March 2012) pred lines from his price, Madoff had tempted to ship of the name for his crimes to his customers Head weality Victims who had been able to all their end of third acties, which were paid for by years of legitimi protits from my find." He regretted confesy to red instead of ping for a full jury trial, coming to thip la med i him in the Bernie Madoff's Ponzi scheme Bemie Madoff, 73, a past chairman of the Nasdaq stock exchange, was a pillar of Wall Street A member of elite country clubs in Palm Beach and Long Island, he was respected and admired by financial institutions and rich individuals in America and Europe. In December 2008, he was charged with fraud by operating a giant Ponzi scheme over 17 years. Such schemes use incoming investments to pay existing investors a steady dividend and to refund investments when requested. Clearly such schemes hinge on rising share prices and ever increasing investment into the fund. The recession put an end to all that. Madoff ran a brokerage business from a three floor office in mid-town Manhattan; but that tumed out to be just a front for the Ponzi scheme. In March 2009, he pleaded guilty to fraud and faces the rest of his life in prison His fund recorded at least 565 billion worth of assets invested for some 5,000 clients. Less than a billion has been recovered. His investors included hedge funds, movie moguls, Swiss banks, and charities, as well as individual rich investors. Santander Bank has offered 1.4 billion euros to customers for savings invested on their behalf in the Madoff fund. Other banks also lost money including HSBC, Royal Bank of Scotland (see HBOS case in this collection of cases), and BNP Paribas. The hedge fund Man Group (see case in textbook) has brought an action to recover $360 million. There had been warning signs. Some had suggested that the fund's returns were too consistent given market movements, others that such returns could not be earned by the strategy Madoff claimed to follow. Nevertheless, the SEC (US Securities and Exchange Commission) failed to detect the fraud over many years, even though allegedly they had had warnings from a whistleblower. In the United States, the SEC, the FBI, and the US Attomey General were involved in the investigations. In the UK, the SFO (Serious Fraud Office) investigated Madoff's London office. Madoff's auditor David Frichling 49, a sole practitioner in suburban New York, and Madoff's brother-in-law were also been prosecuted. Madoff was tried and is now serving a 150 year sentence at a prison in North Carolina. Searches were made for funds held by Madoff or members of his family but there was little chance of significant restitution. Madoff's victims included Hollywood stars, millionaire hedge fund managers, and middle class pensioners often from the Jewish communities in Florida and New York. Madoff expressed no sympathy, because, as he explained, all his clients had declared that they had enough wealth to withstand trading losses. Why did people trust him? Perhaps because they were impressed by his credentials, perhaps because they were influenced by other investors who trusted him, or maybe they thought the returns were so good that he had must have insider information and they wanted to join in A report in the London Times (22 March 2012) reported that in e-mails from his prison cell, Madoff had attempted to shift part of the blame for his crimes to his customers. He attacked wealthy victims who had been obliged to sell their second or third vacation homes, which were paid for by years of legitimate profits from my fund." He regretted confessing to fraud instead of pressing for a full jury trial, claiming that things had turned against him in the global financial crisis, which started in 1987, when clients insisted on withdrawing large sums from their funds in spite of long-term hedging strategies designed to protect them. Discussion questions for the report 1. Discuss the origination of the Ponzi scheme and how Madoff used it. (10%) 2. Discuss at least two relevant corporate governance guidelines that were in place at that time in the US that could have stopped Madoff. Why were Madoff's fraudulent practices not discovered earlier? (20%) 3. Which corporate governance theory do you think will apply to this case? Discuss the theory in relation to this case (20%) 4. Were there any new guideline put into place after the Madoff scandal? Discuss two corporate governance guidelines that can safeguard investors from such schemes in the future? (30%) Presentation, structure, clarity and references (20%)