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Bernie Madoff or Other Ponzi Scheme Question
Posted on 1/15/24 at 9:44 am
Posted on 1/15/24 at 9:44 am
I have watched a couple information series on Bernie Madoff recently as well as a couple other Ponzi Schemes as I find it very interesting and it is an ultimate fear of mine to be a victim. I do not invest with “sketchy” investors, I do have an investment account with a financial advisor (large international firm) as well as a Fidelity Account.
Do others on the Moneyboard let their mind wonder on money they have with a Financial Advisor / Investment Advisor?
Lastly, I run through scenarios of how a Ponzi Schemer should be caught and how Bernie Madoff should have been caught. When a client decided to move assets to a different financial advisor (I understand probably did not happen often with positive paper returns but had to have happened at some point) , if there are no assets, how are they transferred?
Thanks.
Do others on the Moneyboard let their mind wonder on money they have with a Financial Advisor / Investment Advisor?
Lastly, I run through scenarios of how a Ponzi Schemer should be caught and how Bernie Madoff should have been caught. When a client decided to move assets to a different financial advisor (I understand probably did not happen often with positive paper returns but had to have happened at some point) , if there are no assets, how are they transferred?
Thanks.
7
Posted on 1/15/24 at 9:48 am to tigerforever7
quote:
Lastly, I run through scenarios of how a Ponzi Schemer should be caught and how Bernie Madoff should have been caught. When a client decided to move assets to a different financial advisor (I understand probably did not happen often with positive paper returns but had to have happened at some point) , if there are no assets, how are they transferred?
They find a new investor. When the new investors dry up that is when it ends.
Posted on 1/15/24 at 9:53 am to lsu13lsu
quote:
They find a new investor. When the new investors dry up that is when it ends.
What I am asking is, let’s say the investor moves to Raymond James from Bernie Madoff. When the assets (stocks, Mutual Funds, whatever) are transferred to Raymond James, is Raymond James not able to view the assets of when they were purchased and the original price? If they were able to, wouldn’t Raymond James say “these assets are not as shown on paper”.
Posted on 1/15/24 at 10:00 am to tigerforever7
They probably only gave them the option to move cash.
Posted on 1/15/24 at 10:11 am to tigerforever7
Madoff assets were specific to Madoff. You couldn't buy them at other investment firms. It wasn't like transferring SPY from etrade to Schwab. They would've had to sell, pay the applicable taxes and then transfer the cash.
Posted on 1/15/24 at 10:28 am to FinleyStreet
quote:
They probably only gave them the option to move cash
Thank you for the responses. Moving to my first question , if I use a Financial Advisor with a large , pretty well known institution, should I have confidence the investments are invested accordingly? Do any of you ever worry about this? How do you feel more secured?
Once again, I have no reason to think the investments have not been invested accordingly, it is just a natural worry of mine trusting someone with a large sum of money.
Posted on 1/15/24 at 10:40 am to tigerforever7
quote:
Thank you for the responses. Moving to my first question , if I use a Financial Advisor with a large , pretty well known institution, should I have confidence the investments are invested accordingly? Do any of you ever worry about this? How do you feel more secured?
You would hope so
Madoff had a bs auditor single client office probably getting paid off
Bigger office should have controls on place
Posted on 1/15/24 at 11:02 am to tigerforever7
With Madoff, there were no assets.
It was all completely fabricated.
So if you exited early before the collapse, he would have had to cut you a check on your fictitious assets.
It was all completely fabricated.
So if you exited early before the collapse, he would have had to cut you a check on your fictitious assets.
Posted on 1/15/24 at 11:29 am to tigerforever7
Madoff was a well respected leader in the financial community
He was as legit but fell into a trap where his ego would not allow him to show negative returns so he tried to mask his way out and it fell apart.
The Stanford guy was worse as he was a Ponzi scheme from the beginning. He had bad intentions from the outset. The difference though was not in fabricating trades but in utilizing an offshore bank to hide from regulators and the bank CD’s he was using to run the scheme.
Smart investors should have known that his rates were sketchy tho.
He was as legit but fell into a trap where his ego would not allow him to show negative returns so he tried to mask his way out and it fell apart.
The Stanford guy was worse as he was a Ponzi scheme from the beginning. He had bad intentions from the outset. The difference though was not in fabricating trades but in utilizing an offshore bank to hide from regulators and the bank CD’s he was using to run the scheme.
Smart investors should have known that his rates were sketchy tho.
This post was edited on 1/15/24 at 12:13 pm
Posted on 1/15/24 at 11:47 am to tigerforever7
quote:
ultimate fear of mine to be a victim
I mean, just don't be stupid. If they are promising >10% a year returns, run.
Posted on 1/15/24 at 12:31 pm to j1897
quote:
I mean, just don't be stupid. If they are promising >10% a year returns, run
No guarantees. I have even checked out the Financial Advisor on FINRA Broker Check and everything looks good. I am just being squeamish but need to have more trust and feel confident with relationship. Either way, for every dollar I give Financial Advisor for investing, I invest equal amount in Index Funds in my Fidelity account with a hold for an infinite amount mentality.
Posted on 1/15/24 at 1:55 pm to SlidellCajun
quote:
He was as legit but fell into a trap where his ego would not allow him to show negative returns so he tried to mask his way out and it fell apart.
From everything I have read and watched he went rogue pretty early on in his career. If I remember correctly he even had to borrow money from his father in law early on to patch a hole. And then it exploded from there. I think that because he started it so early on that is what allowed him to build it to the point it got to. Now he did have a seperate market maker business that was legit but that was not the investment arm and was started well later in his career.
Posted on 1/15/24 at 3:07 pm to tigerforever7
quote:
Bernie Madoff should have been caught
When your returns are out of whack with every one else’s and history there’s usually something fishy going on.
Posted on 1/15/24 at 4:04 pm to tigerforever7
You should feel absolutely fine with any advisor who works for a broker dealer (ed jones, NY life, etc). They aren’t the boss and have no say-so in what is available or how it’s reported to you.
For RIAs, anyone using a well known custodian should be ok too (Schwab, fidelity, vanguard). They also have no say-so in how it is reported to you or the paperwork involved.
The only thing that would make me nervous is if I hadn’t heard of the place my money was actually to be held, and the advisor had some type of ownership or authority in that firm.
Otherwise, you’re just worrying over almost nothing. Not saying the advisor isn’t going to put you in some crappy annuity and suck at their job or whatever, but you can be pretty sure he’s not taking it to the Bahamas with him.
For RIAs, anyone using a well known custodian should be ok too (Schwab, fidelity, vanguard). They also have no say-so in how it is reported to you or the paperwork involved.
The only thing that would make me nervous is if I hadn’t heard of the place my money was actually to be held, and the advisor had some type of ownership or authority in that firm.
Otherwise, you’re just worrying over almost nothing. Not saying the advisor isn’t going to put you in some crappy annuity and suck at their job or whatever, but you can be pretty sure he’s not taking it to the Bahamas with him.
Posted on 1/16/24 at 8:54 am to tigerforever7
quote:
Lastly, I run through scenarios of how a Ponzi Schemer should be caught and how Bernie Madoff should have been caught. When a client decided to move assets to a different financial advisor (I understand probably did not happen often with positive paper returns but had to have happened at some point) , if there are no assets, how are they transferred?
Read the book No One Would Listen by Harry Markopolos.
Posted on 1/16/24 at 1:58 pm to j1897
I see Trajan Wealth commercials on TV . They guarantee a 10% return. I don't know what the ramifications are if they don't meet the 10% returns, but he guarantees them nonetheless. I'm guessing if they don't meet the 10% gain, they may waive their trade fee.
Dude seems slimier than most commercial actors. I also believe 90%+ of actors in commercials are slimy and basically refuse to spend any money on commercial products. But, have any of you seen the Trajan commercials, and if so, have you looked into their product? I wouldn't invest either way, but just curious what their angle is.
Dude seems slimier than most commercial actors. I also believe 90%+ of actors in commercials are slimy and basically refuse to spend any money on commercial products. But, have any of you seen the Trajan commercials, and if so, have you looked into their product? I wouldn't invest either way, but just curious what their angle is.
Posted on 1/16/24 at 10:25 pm to tigerforever7
quote:
Thank you for the responses. Moving to my first question , if I use a Financial Advisor with a large , pretty well known institution, should I have confidence the investments are invested accordingly? Do any of you ever worry about this? How do you feel more secured?
No, I can go into any of my accounts online and see everything. Should also be sending you account statements if you haven’t gone paperless.
Idk I feel like if it was a large company they would be doing this or have online account access.
This post was edited on 1/16/24 at 10:26 pm
Posted on 1/18/24 at 3:24 pm to tigerforever7
quote:
Thank you for the responses. Moving to my first question , if I use a Financial Advisor with a large , pretty well known institution, should I have confidence the investments are invested accordingly? Do any of you ever worry about this? How do you feel more secured?
Yes. 1st off a lot of firms don't self custody.
The ones that do are highly regulated and generally have pretty good scale. Madoff was unique in that.
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