Since Madoff’s arrest, 15 other individuals – including his accountants and traders – have been charged, despite the bigwig claiming he was a one-man show. Nine of them, including Frank DiPascali - Madoff’s top dog and one of BLMIS’ longest-serving employees - pleaded guilty and have agreed to assist the government in building cases against former co-workers. Cases are ongoing and more people could be charged.
In the Madoff aftermath, the industry is in flux with the Securities and Exchange Commission (SEC) in the U.S. proposing several reforms – including increased transparency, better coordination efforts and improved fraud-detection procedures – to combat criticism. Industry equivalents in Canada, the U.K. and Australia are following suite. Already, enforcement by the SEC in 2011 and 2012 has resulted in US$6 billion in court-ordered penalties and disgorgement. But, will these efforts prevent a Ponzi scheme from ever happening again?
“Unfortunately, I do think it could happen again, although on a much smaller scale. The industry and the regulators and enforcers are smarter now, but they will forget,” says Christianson. “Regulation tries to keep bad players out of the industry, but Madoff was a pillar of the community in the industry.
"In my view, the regulators spend too much time making up rules and spending time on the majority of good people in the industry, and not enough in trying to stop the bad guys before they cause damage. Smart criminals are always a few steps ahead.”
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