I have recently been following alot on the automotive industry in US and recently picked up on the Madoff fraud by conducting on ponzi scheme. A ponzi scheme is like those skim cepat kaya whereby you invest a certain amount and your returns (almost double digit percentage) would be very substantial compared to other investment schemes such as hedge funds or govt securities. From the amount you invest, the amount will be pooled up with other investors putting their money in also.
What is the Madoff scam you may ask?
Bernard Madoff financier who allegedly ran a $50 billion Ponzi scheme by using cash from new investors to pay off older ones amounting to $50 billion. This form of investment trickery was made known and was revealed when Madoff no longer had the ability to generate the cash to cover the $50billion.
Resulting:
Hedge funds are heavily affected along with many wealthy private investors due to all teh risk exposure from the Madoff's investment pool.
Philanthropies, charitable organisations are also affected due to the certain individuals who are affected.
The Madoff scam was another hit to the current financial crisis affecting mainly the
World Stock Markets causing the fall in global stock index such as the US Dow Jones, Brazil's Ibovespa.
This could also mark the end of the hedge fund industry. Among the few victims of the Madoff scam would involve alot of international securities companies such as Japan's Nomura Holdings lossing up to $306 million, French bank BNP Paribas risk exposure up to $470 million in losses and Spain's Grupo Santander SA.
What will happen to Madoff?
For now, the Courts are in seized of his assets by freezing all liquidated assets to prevent him from accessing them.
