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UK financial firm assails US financial regulatory process over Madoff fraud

By Bernard Hibbitts (editor) and University of Pittsburgh School of Law students.

[JURIST] UK financial firm Bramdean Alternatives Limited raised concerns Saturday about the US financial regulatory process in the wake of Thursday's arrest of former NASDAQ chairman Bernard Madoff for a $50 billion fraud scheme. Bramdean's value dropped by more than 35% over news of its exposure to the fraud, which was disclosed by US Securities and Exchange Commission (SEC) charges filed on Thursday in New York against Madoff and his firm, Bernard L. Madoff Investment Securities LLC. Bramdean's statement said, "The alleged failure raises fundamental questions about the regulatory system under which this has happened and no doubt this will be the subject of intense debate as the facts emerge." Several foreign financial institutions have been affected by the scandal, including Royal Bank of Scotland, Man Group, and Santander. Madoff has been charged with violating the anti-fraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940. Madoff allegedly told two employees of his firm Wednesday that his investment advisory business was a fraud. According to the complaint, Madoff "stated that he was 'finished,' that he had 'absolutely nothing,' that 'it's all just one big lie,' and that it was 'basically, a giant Ponzi scheme.'" Madoff was released on bail Thursday, and a preliminary hearing is scheduled for January 12. Madoff, 70, founded his investment firm in 1960. He has served as chairman of the board of directors of the NASDAQ stock market and was a member of the board of governors of the National Association of Securities Dealers (NASD). According to his firm's website, it ranked among the top 1 percent of US securities firms.

Full post as published by JURIST - The Paper Chase on December 15, 2008 (boomark / email).