Harry Markopolous is an independent fraud investigator and the SEC regarding Madoff back in and wrote them this letter in Harry Markopolos spotted Bernard Madoff’s $65bn Ponzi scheme years He approached the securities and exchange commission (SEC) as. Harry M. Markopolos (born October 22, ) is an American former securities industry Markopolos has criticized the SEC for both failing to discover the Madoff fraud despite repeated tips, and for failing to investigate properly the larger.

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Markopolos realized Madoff was running a Ponzi scheme nearly a decade ago, when he was working as an options trader at a Boston financial lettsr that was losing customers to Madoff’s more profitable strategy. It took him another four hours to mathematically prove that they could have only been obtained by fraud.

Even after leaving Rampart infrustrated that he was in a business that had to compete with cheats and law breakers, [17] Markopolos continued to be driven by the intellectual challenge of solving the problem, and the ongoing encouragement from Boston SEC staffer Ed Manion.

Harry Markopolos

Markopolos met with Garrity duringand said that while Garrity realized almost immediately that Madoff was violating the law, he could not take any action because Madoff wasn’t based in New England. He described the private moments he had with victims of the Madoff fraud as: When Markopolos heard this, he was convinced beyond all doubt that Madoff’s wealth-management business was a Ponzi scheme.

The SEC must establish a unit to accept “whistleblower” tips, and move its activity closer to financial centers away from Washington, D. Spitzer’s family trust had invested in Madoff’s business.


Very few people in the world have the mathematical background needed to manage these types of products but I am one of them …. The biggest red flag, however, was that the return stream rose steadily with only a few downticks—represented graphically by petter nearly perfect degree angle.

Madoff Whistleblower: SEC Failed To Do The Math : NPR

But also, he says, it was unthinkable. The SEC under current Chairman Mary Schapiro is implementing reforms designed to avoid a repeat, including more oversight by senior lawyers and greater use of subpoenas. We had invested countless hours and risked our lives, and had saved no one — although eventually, after Madoff’s collapse, we would succeed in exposing the SEC as one of this nation’s most incompetent financial regulators.

Subsequently, she left the agency. So would you please open the door for me? I could barely breathe. Again and again, he could not simulate Madoff’s returns, using information he had gathered about Madoff’s trades in stocks and options.

Harry Markopolos’s letter to SEC regarding Madoff

You can download the full submission 1. In his book, Markopolos wrote that this was a sign Madoff was yo out of cash and needed to increase his intake of new funds to keep the scheme going. He says his efforts to alert securities regulators about Madoff’s schemes were repeatedly ignored.

Madoff gained knowledge of our activities, he may feel threatened enough to seek to stifle markopoloss. Postal Service was brought in to conduct an independent outside review. However, he said, he felt compelled to pursue it because “when someone’s competing on your playing field, who’s a dirty player, you want him tossed off the field.


The new documents highlight the role of Markopolos who in began asking the SEC how Madoff could sustain high returns for investors in all sorts of market conditions. Very few people in the world have the mathematical background needed to manage these types of products but I am one of them … “Madoff Securities is the world’s largest Ponzi Scheme. They’d taken him out in handcuffs. New York Times Co. So I wouldn’t start maroopolos car without first checking under the chassis and in the wheel wells.

I have experience managing split strike conversion products both using index options and ketter individual stock options, both with and without index puts.

Archived from the original on January 22, He approached the securities and exchange commission SEC as early as They’re all going to be ruined financially, they’ll all be sued and, hopefully, many of them will go to jail. From —, he served as a portfolio manager at Boston -based options trading company Rampart Investment Management, ultimately becoming its chief investment officer. Cheung never expressed even the slightest interest in asking me questions”, Markopolos said, claiming she was too concerned with Markopolos mentioning the possibility of a reward and the fact that he was a competitor of Madoff.

However, the SEC took no action.