Courtesy of Pam Martens.
New York State Attorney General, Eric Schneiderman
Next month, it will be four years since the decades-long Madoff Ponzi scheme was discovered – not by the SEC which had for years received reams of documents from whistleblower Harry Markopolos outlining what he believed to be a Madoff Ponzi scheme – but by a confession from Madoff himself.
For those who lost every dollar of savings they had accumulated over a lifetime to Madoff’s scheme, one can only imagine the contempt with which they regard the SEC.
Yesterday, New York State Attorney General Eric T. Schneiderman announced a $210 million settlement with the Ivy Asset Management, LLC, a Bank of New York Mellon subsidiary that advised clients to invest with Bernard Madoff, noting that “when added to future amounts Madoff investors anticipate receiving from the Madoff bankruptcy proceeding, today’s settlement is expected to return all or nearly all the original investment to those defrauded by the Ponzi scheme in this case.”
According to the Attorney General’s office, Ivy received over $40 million between 1998 and 2008 to conduct due diligence for clients with large Madoff investments. One of the areas that Ivy investigated was Madoff’s so-called split-strike conversion option strategy which he credited with allowing him to deliver his stellar results consistently year after year. When Ivy learned there were insufficient options traded to support Madoff’s purported options strategy, he gave Ivy three vastly different explanations – all of which Ivy knew to be false.
The Attorney General’s office obtained internal Ivy documents showing that Ivy had deeply held reservations about Madoff but failed to disclose them to clients. One email from an Ivy principal to a subordinate stated: “Ah, Madoff, you omitted one possibility – he’s a fraud!”
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