Monday, 2 March 2015
Last updated 2 hours ago
Aug 26 2011 | 1:10pm ET
Bernard Madoff knows a thing or two about fraud, and he's pointing the finger at one of the hedge fund industry's biggest names in his latest media interview.
The arch-fraudster, who ran a $65 billion Ponzi scheme for decades, told Fox Business Network's Charlie Gasparino that SAC Capital Advisors' insider-trading has been an open secret on Wall Street for years.
"The worst-kept secret was Steve Cohen's trading, as well as most other hedge funds," Madoff told Gasparino from his jail cell in Butner, N.C.
The only problem, as with Madoff's previous media attempts to resuscitate his reputation, is that his credibility is non-existent—and his chats with Gasparino won't help to save it.
Madoff admits that he has never met Steven Cohen, but said that he and the SAC founder spoke on the phone once. Madoff said he told Cohen "to stop his managers from approaching my traders with their offer to give them info if we let SAC execute our commission business."
SAC, which has faced a number of insider-trading investigations but has never been accused of any wrongdoing, wasted no time disposing of Madoff's claims.
"Steven Cohen has never met or spoken with Bernard Madoff and any such assertion is absolutely false," a spokesman for the hedge fund told Gasparino. "SAC is not and has never been a broker/dealer and does not execute trades for other firms."
Madoff's tall tales do not end with SAC, either. He told Gasparino that he is working with the Harvard Business School on a course in business ethics and entrepreneurship, focusing on his "experiences building my market-making and prop. trading business and my role in NASDAQ and electronic trading."
The Ivy League school says "the entire matter is not true. The business school is not working with Bernard Madoff on anything."
Madoff also spent time complaining that the financial services industry is "corrupt and stacked against the typical investor," apparently without irony.
Madoff said he was essentially a victim. "I made a terrible mistake with the help of others but the fact that these other complicit parties were complicit does not excuse me for allowing myself to be trapped into the greed of others," he allows. But then he adds, "The only reason my large investors continued to give me money was they all believed that I was front-running like everyone else and they felt this explained my consistent performance," a performance that was a complete fiction.
The Swiss, in particular, "were sure that it was OK because other firms were also doing it. In their warped minds, this practice was no worse than illegal bank accounts."
Other shenanigans, notably insider-trading, go on "at every major firm's prop. desk and at every level of the industry in plain sight and is the easiest thing to spot with today's order trails." And the only reason they are not spotted, Madoff claims, is that so much regulation of Wall Street is done by people like himself, noting that he "served for longer than any other industry member" on one critical securities industry committee.
Expect more of the same—and a possible antidote to it—over the coming weeks. Madoff is said to be working on a major televised interview, and his estranged son and former employee Andrew "is talking with 60 Minutes," a report that is not likely to be favorable to the fraudster.
In the former, however, you can expect explanations of how Madoff's fraud wasn't really all that bad.
"I will leave you with one thought," he told Gasparino. "If it was my intention to steal people's money as is being depicted, I would have taken the $5 billion in cash and financial instruments that was in my Chase and BNY bank accounts and disappeared. I certainly had the time and banking connections to accomplish this once I realized I could not dig out of my hole."
Jan 23 2015 | 1:00pm ET
In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…