Personal Responsibility 1: Wall Street and Madoff

It was, according to Bernie Madoff:

Willful blindness. They had to know. But the attitude was sort of, "If you’re doing something wrong, we don’t want to know."

In his first interview for publication since his arrest in December 2008, Madoff looked different. Gone was the aloof stoicism and more than a few pounds from his belly.

Also gone was the notion that this too shall pass .

For Madoff, the biggest swindle and theft since the Third Reich robbed and raped Europe more than half a century ago has gone far from unpunished. Not only will he never see the light of day again, but Madoff's family is arguably suffering greater punishment than Bernie himself. His son Mark hanged himself back in December, the family faces mountains of lawsuits and the apparent likelihood of losing most (if not all) of their assets.

But you guys don't need a history lesson, in fact I want to talk about something completely different, but to me, at least...very much the same.

Personal Responsibility



This is one of our favorite subjects of discussion. Maybe some of you guys don't notice it. A great deal of personal strife, not only on this site, but in life is centered around the notion of I'm right, you're wrong.

Or...for the purposes of this sad story...

I'm innocent and you are guilty.

I'll be exploring this topic in the next few days, so I wanted to start off with something very clear and obvious like the Madoff situation.

No good guys in this tale. Bernie got off lucky if you ask me. Something public and grotesque would have been more befitting.

But what about the banks and hedge funds he mentioned?

It is pretty interesting that for over 2 years we've heard hardly a peep about Bernie's accomplices, his henchmen, his cronies, his buyers, his sellers, his counterparties... all of them unwitting?

Tell me...

Is that really possible?

I don't expect any candor from folks who worked with Bernie indirectly, though we all know that they are here among us lurking silently pretending this doesn't apply to them.

I am curious as to how responsible you guys think the overall Wall Street establishment is for Madoff's transgression?

Is Bernie really the disease or is he just the symptom that got put under the microscope?

I think that it is a matter of personal responsibility and your attitude towards it.

I am curious who here would accept responsibility if they found out that some comp they ran or some sheet they spread contributed to Madoff's Ponzi Scheme?

I am curious if such people actually exist on Wall Street or if I will be hit with a corked bat full of excuses and rationalizations, as to why Bernie and Bernie alone was the culprit.

This black eye on Wall Street is a Scarlett Letter of personal irresponsibility for all of us.

I find it funny that most of us are very conservative when it comes to our own dollar. But become suspiciously silent when it comes time to looking into the mirror of personal responsibility...

 

I think all of us would like to believe that we would take the moral high ground when the time comes for us to look into the mirror of personal responsibility. However, whether or not we choose to do so would depend on so many different and even extraneous factors.

Sometimes the line between right and wrong is so blurred and gray that we can no longer tell the difference between white and black.

I know for me personally, I rarely EVER want to take personal responsibility as a natural reaction. If there is any way for me to 'get away with it' or self-delude myself by placing the blame on someone/something else, I'll try to make it happen. Nevertheless, I've realized that my actual reaction is not always so crude. Sometimes taking responsibility is the only way for one to get over their blunders or learn from one's mistakes. Rather than live through the guilt and torture of doing something as serious as Madoff's Ponzi Scheme, I perhaps would rather just admit it, deal with the consequences, and then move on.

Some people can ignore guilt. I can't.

"Rage, rage against the dying of the light." - DT
 
Best Response

On the Madoff website, back in the day, this was under "About Us":

"In an era of faceless organizations owned by other equally faceless organizations, Bernard L. Madoff Investment Securities LLC harks back to an earlier era in the financial world: The owner's name is on the door. Clients know that Bernard Madoff has a personal interest in maintaining the unblemished record of value, fair-dealing, and high ethical standards that has always been the firm's hallmark."

I thought this was humorous with where everything was going at the time this was posted on their site. I used the waybackmachine to look at the site in, I think, 2004. Interesting.

I am huge on personal responsibility, something I think is lacking throughout society. Everything is always somebody else's fault. Bernie perpetrated a ponzi scheme that fooled a lot of people. But, at some point you should question things that are too good to be true, because they often aren't true. I am sure people that dealt with him had thoughts of a scheme.

"yeah, thats right" High-Five
 
David_Puddy:
But, at some point you should question things that are too good to be true, because they often aren't true.

This world needs more skeptics. We've got too many people just blindly running to the the next miracle drug and not thinking the steps through.

In 1976, James Hunt broke the sound barrier through Eau Rouge only to retire before the event finished... following the race he had sex with three Belgian nurses at the clubhouse near La Source.
 

You guys might be surprised how many of his investors knew he was a crook. The mistake they made was suspecting him of the wrong crime.

Many of his investors thought he was using inside information on order flow from his legitimate broker-dealer to front run the market on their behalf. They were perfectly content to reap these illicit gains for two decades. Most of them thought he would get caught at some point, and even go to jail. But they all believed that when that happened, their money would be returned to them when the fund was liquidated and they'd get to keep all they made over the years.

They had no idea that he'd never made a single investment on their behalf, and that all their money just went into a massive pool that paid out redemption requests.

They were perfectly content to pocket illicit gains. They just had no idea the ultimate joke was on them.

 

The best (or worst, depending how you look at it) I could do is turn a blind eye. I can't live with myself when I feel I've violated my conscience, so any transgression on my part would probably be passive rather than active.

I am permanently behind on PMs, it's not personal.
 

What I think we've got here is a failure to really do research/homework about who manages one's money and how. In a sense, it's freeloading--the regulators have offloaded their responsibilities to the credit-rating agencies, for example. Everyone says it's so difficult to spot a con artist, but really people. Make sure your money manager doesn't have both custodial power over your funds as well as the ability to invest them. And if you can't get your head around how they're making the money, then get out.

I know it may seem like oversimplification, but it can't really be that difficult to detect a con artist, can it?

Metal. Music. Life. www.headofmetal.com
 

I wouldnt believe a single thing he says, he condemns his investors (independant 3rd parties) for implicitly being aware of the fraud being perpretrated in his shop and in the same breath says that his family, including his sons and daughter who worked in his office had no clue about the fraud. though there is a level of individual responsibility, which is to ensure as an investor I've done my due diligence, at the end of the day you have to trust the guy your doing business with. There is no way to price the risk of your fund manager committing fraud. if you had the slightest inclination that he was, you would pull your money out.

 

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