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Madoff Essay

  • Submitted by: anonymous
  • on November 13, 2012
  • Category: Miscellaneous
  • Length: 2,074 words

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Below is an essay on "Madoff" from Anti Essays, your source for research papers, essays, and term paper examples.

Madoff

. A ponzi scheme is an investment plan that promises quick and profitable returns, in which the operator takes funds and pays the returns to an existing investor through funds contributed by new investors.   It is without a doubt that the Madoff scandal is history’s largest Ponzi scheme that would end up costing billions for thousands of investors. It not only affected thousands of investors, but also his own family and close friends. This is an event that went on more than two decades due to incompetence, negligence and many other mistakes within the Securities Exchange Commission (SEC).  

Madoff started his investment business known as Bernard L. Madoff investment Securities, LLC (Henriques, 2011). This would be his business that would end up in bankruptcy in 2008. This is because the global economic crisis during the year which would make it impossible, even for Madoff, to continue to pull off . While the scheme may have gone on for more than two decades, Madoff was not always involved in the ponzi scheme. He engaged in riskless arbitrage during the 1970s as a strategy to raise money for his firm. Arbitrage was exploiting momentary price differences for the same product in different markets and making a profit from it. It wasn’t until the NASDAQ that Madoff really started to take off and become popular. He considered himself a cofounder and part of the movement for automation of Pink Sheets and later became chairman of NASDAQ. (Henriques, 2011) Madoff continues to build up his reputation throughout the decade and eventually adopted a “split-strike” conversion strategy over arbitrage in 1985(Henriques, 2011). “The strategy was empowered by the innovations in options trading that were pioneered in the financial markets of Chicago in the 1970s. A stock option is simply a contract that gives its buyer the right (the “option”) to buy or sell that stock at a specific price for a specific period of time” (Henriques, 2011). It seemed like throughout these...

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Madoff. Anti Essays. Retrieved December 11, 2018, from the World Wide Web: http://parimatch-stavka7.com/free-essays/Madoff-348665.html


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