Wednesday, December 17, 2008

Ripped off foreign clients ask why US allowed Madoff funds

Big News
Tuesday 16th December, 2008

US financial regulators have been castigated by foreign countries, whose financial experts have asked why they were unable to prevent an alleged 50-billion-dollar fraud scheme by Wall Street player Bernard Madoff (pic. left).

Spain's stock market regulator said investment funds in the country had nearly US$150 million exposure to funds from Madoff Investment Securities.

Spanish newspaper El Pais pointedly said the supposed meticulous supervision by the US financial watchdog had failed in the task of preventing massive fraud.

British investment consultants have referred to the financial scandal as the unacceptable face of capitalism.

Jean-Pierre Jouyet (pic. left), who this week became France's financial markets watchdog, cited three previous crises which the US had failed to see coming: the 1998 collapse of US hedge fund managers LTCM; the 2001 false-accounting scandal involving energy giant Enron; and the collapse in September of the Lehman Brothers bank.

On Monday, Dominique Strauss-Kahn (pic. right), director general of the International Monetary Fund, expressed concern over the failure of US regulators to spot warning signs at Madoff's firm.

Bernard Madoff, 70, was arrested last week after allegedly confessing to defrauding 50 billion dollars by secretly using money from new investors to pay interest to other investors.

The alleged fraud has been likened to a pyramid scheme.

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