BERNARD LAWRENCE “BERNIE” MADOFF
PROFESSOR RYAN KOPF
BUSINESS LAW I
AUGUST 20, 2010
1. Describe three types of illegal business behavior alleged against Mr. Madoff and for each type of behavior, explain how the behavior is illegal or unethical in the conduct of business.
Mr. Madoff engaged in fraud, theft and deceptive practice while operating a ponzi scheme for over 20 years. Fraud was committed because he intentionally took money from people knowing that he could not give the returns he promised knowing the only person/people to gain from these investments was Mr. Madoff and his family. Mr. Madoff committed theft when he used people investments monies to repay ...view middle of the document...
3. Describe three business safeguards (risk management) that may have prevented the harm caused by Mr. Madoff.
The biggest safeguard should have been the Securities Exchange Commission should have acted on all the tips it was given by other brokers like Harry Markopolos, who on three occasions wrote and called the SEC in reference to Mr. Madoff. The SEC should have thoroughly gone through records and demanded that Mr. Madoff turnover records of all his trading and clients. They never reviewed any documents that could verify the transactions of his firm. The ultimate safeguard would have been Mr. Madoff running a business that was transparent. He never discloses to his clients/investors how he made them money.
4. Describe three ways private investors might have better protected themselves from risk.
One way in which private investors can protect themselves would be by not invest all of their money with one person/firm. Ask questions and demand answers. In the Madoff case a lot of investors stated they never received a straight answer from Mr. Madoff when they approached him with questions. Private investor should always be skeptical if a firm cannot produce...