Bernard Madoff Case Summary

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Sec Litigation Release # 20834, Bernard L Madoff
The Violation and How It Occurred
Bernard L. Madoff designed an insidious Ponzi scheme, which resulted in his successful violation of various antifraud legal provisions established by the federal securities laws (Hansen & Movahedi, 2010). At the time of his trial in 2008, the Securities and Exchange Commission (SEC) fronted numerous allegations against the man and his company, Bernard L. Madoff Investment Securities LLC. Among these allegations was a $ 50 billion fraud coupled with contraventions of Section 17(a) of the Securities Act 1993 and Section 10(b) of the Securities Exchange Act of 1934. Madoff and his company were also found to have violated Rule 10b-5, as well as Sections 206(1) and 206(2) of the Advisors Act of 1940. These gross violations enabled Madoff to avoid opportunity costs (Creswell & Thomas, 2009). Because of this, his firm fronted taxes, which were derived from fictitious profits.
When he set up the business, Madoff honestly operated his company as required. This happened until the 1990s when he opted for the easier route of fabricating his company’s returns by hatching a scheme. During the early days of the scheme, Madoff managed to convince anyone who would be suspicious about his profits by claiming that they were within the market levels.
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Apart from aiding on the repayment plan by way of recovery through assets, the company had no grounding to conduct any further business; hence, the firm was technically dead. The company collapsed due to its violation of securities provisions. This collapse was preceded by numerous events; first, there were undercover investigations into the dealings of the company, which revealed the massive violations. This was followed by criminal proceedings and he pleaded of

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