Madoff Arrested Four Years Ago Today

Dec 11 2012 | 9:37am ET

Four years ago today, Bernard Madoff was arrested for running a $65 billion Ponzi scheme, one of the longest-running and most audacious frauds in history and one that shook the hedge fund industry to its core.

But while Madoff continues to work off his 150-year prison sentence—he pleaded guilty in 2009—the case is far from at an end. The court-appointed trustee in the case is still seeking to recover assets for victims, and five former employees are set to go on trial for their role in the fraud next year. Madoff's brother, Peter, a longtime executive at Madoff's firm, pleaded guilty this summer and will be sentenced five days before Christmas.

Madoff's arrest, after he confessed to his two sons—one of whom took his own life two years ago today—led to major changes in the hedge fund industry. Investors began to clamor for increased transparency after several funds of hedge funds—many of which had made their names as Madoff feeder funds—lost millions or billions in the scam.

Receiver Irving Picard has since recovered more than half of the $17.5 billion in principal invested with Madoff over the decades. He hopes to gather at least $3 billion more, and has already returned $3 billion to victims.

But only clients who invested directly with Madoff are entitled to a share. Those who lost money through feeder funds have to battle it out with those firms for their fair share.

Four years in, Picard's top lawyer, David Sheehan, told The Wall Street Journal that he and his team "had to reconstruct this from ground zero and put it back together again."

"I don't think either of us thought we could achieve these results," Sheehan said. "There's never been any case like this."

In Depth

Related-Company Fees: Normal Industry Practice or Conflicted Compensation?

Nov 11 2015 | 4:23pm ET

Regulatory agencies as well as investors are increasingly exploring whether certain...


Ferrari Roars in Wall Street Debut

Oct 21 2015 | 4:28pm ET

Shares of supercar maker Ferrari jumped as much as 15 percent to a high of nearly...

Guest Contributor

Private Debt - What is the Opportunity?

Nov 11 2015 | 3:28pm ET

In this contributed article, Rob Allard, founding partner of Firebreak Capital...


Editor's Note

    Oct 21 2015 | 10:41am ET

    One of the most unique charity benefits in the hedge fund industry, A Leg To Stand On's (ALTSO's) Hedge Fund Rocktoberfest - NYC, raised nearly $500,000 last Thursday thanks to the generous support of major sponsors and nearly 1,400 attendees from the Tri-State finance, business and hedge fund communities. Read more…