This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.
You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/7779442.stm
The article has changed 6 times. There is an RSS feed of changes available.
| Version 2 | Version 3 |
|---|---|
| $50bn fraud charge at hedge fund | $50bn fraud charge at hedge fund |
| (about 2 hours later) | |
| The former chairman of the Nasdaq stock market has been arrested and charged with securities fraud, in what may be one of the biggest fraud cases yet. | The former chairman of the Nasdaq stock market has been arrested and charged with securities fraud, in what may be one of the biggest fraud cases yet. |
| Bernard Madoff ran a hedge fund which ran up $50bn (£33.5bn) of fraudulent losses and which he called "one big lie", prosecutors allege. | Bernard Madoff ran a hedge fund which ran up $50bn (£33.5bn) of fraudulent losses and which he called "one big lie", prosecutors allege. |
| Mr Madoff is alleged to have used money from new investors to pay off existing investors in the fund. | Mr Madoff is alleged to have used money from new investors to pay off existing investors in the fund. |
| His lawyer said he would fight to get through these "unfortunate events". | His lawyer said he would fight to get through these "unfortunate events". |
| The 70-year-old has been released on $10m bail. | The 70-year-old has been released on $10m bail. |
| High-profile victims | |
| Bramdean Alternatives has emerged as a victim of the fraud, with 9.5% of its investments exposed to the New York broker, it said in a statement on its website. | |
| Nicola Horlick, the high profile fund manager labelled superwoman by the UK press, is the company's nominated fund manager. | |
| In an interview earlier this year with the Financial Times, Ms Horlick praised Mr Madoff. | |
| "He is someone who is very, very good at calling the US equity market," she said. | |
| She added: "This guy has managed to return 1% -1.2% per month, year after year after year." | |
| 'Pyramid scheme' | 'Pyramid scheme' |
| Mr Madoff founded Bernard L.Madoff Investment Securities in 1960, but also ran a separate hedge fund business. | Mr Madoff founded Bernard L.Madoff Investment Securities in 1960, but also ran a separate hedge fund business. |
| According to the US Attorney's criminal complaint filed in court, Mr Madoff told at least three employees on Wednesday that the hedge fund business - which served up to 25 clients and had $17.1bn of money under management - was a fraud and had been insolvent for years, losing at least $50bn. | According to the US Attorney's criminal complaint filed in court, Mr Madoff told at least three employees on Wednesday that the hedge fund business - which served up to 25 clients and had $17.1bn of money under management - was a fraud and had been insolvent for years, losing at least $50bn. |
| He said he was "finished", that he had "absolutely nothing" and that "it's all just one big lie", and that it was "basically, a giant Ponzi scheme", the complaint said. | He said he was "finished", that he had "absolutely nothing" and that "it's all just one big lie", and that it was "basically, a giant Ponzi scheme", the complaint said. |
| He told them that he planned to surrender to the authorities but not before he used his last $200m-$300m to pay "selected employees, family and friends". | He told them that he planned to surrender to the authorities but not before he used his last $200m-$300m to pay "selected employees, family and friends". |
| Under a Ponzi scheme, also known as a pyramid scheme, investors are promised very high returns on their investment, while in reality early investors are paid with money collected from later investors. | Under a Ponzi scheme, also known as a pyramid scheme, investors are promised very high returns on their investment, while in reality early investors are paid with money collected from later investors. |
| On Thursday, two agents from the FBI went to his apartment. | On Thursday, two agents from the FBI went to his apartment. |
| Investors have withdrawn from hedge funds amid market volatility | Investors have withdrawn from hedge funds amid market volatility |
| According to the complaint, Mr Madoff told them he knew why they were there, and said there was "no innocent explanation". | |
| He told them he "paid investors with money that wasn't there", that he was "broke" and "insolvent", that it "could not go on" and he expected to go to jail. | He told them he "paid investors with money that wasn't there", that he was "broke" and "insolvent", that it "could not go on" and he expected to go to jail. |
| Stunning fraud | Stunning fraud |
| If found guilty, US prosecutors say he could face up to 20 years in prison and a fine of up to $5m. | If found guilty, US prosecutors say he could face up to 20 years in prison and a fine of up to $5m. |
| "Our complaint alleges a stunning fraud - both in terms of scope and duration," said Scott Friestad at the SEC. "We are moving quickly and decisively to stop the scheme and protect the remaining assets for investors." | "Our complaint alleges a stunning fraud - both in terms of scope and duration," said Scott Friestad at the SEC. "We are moving quickly and decisively to stop the scheme and protect the remaining assets for investors." |
| Dan Horwitz, Mr Madoff's lawyer, said: "Bernard Madoff is a longstanding leader in the financial services industry. We will fight to get through this unfortunate set of events." | Dan Horwitz, Mr Madoff's lawyer, said: "Bernard Madoff is a longstanding leader in the financial services industry. We will fight to get through this unfortunate set of events." |
| Many investors have been pulling money out of hedge funds in an effort to reduce their exposure to risk. | Many investors have been pulling money out of hedge funds in an effort to reduce their exposure to risk. |
| "This is a major blow to confidence that is already shattered - anyone on the fence will probably try to take their money out," said Doug Kass, president of Seabreeze Partners Management, a hedge fund. | "This is a major blow to confidence that is already shattered - anyone on the fence will probably try to take their money out," said Doug Kass, president of Seabreeze Partners Management, a hedge fund. |