An Analysis of Madoff Investment Securities : How The Biggest Financial Scam Took Place and The Failure of Assurance Services

The case study deals with one-time non-executive chairman of the NASDAQ stock market, Bernie L. Madoff’s longest and largest Investment fraud referred as the “Ponzi Scheme” through his founded Penny Stock Brokerage (later named Bernard L. Madoff Investment Securities LLC Company) and its aftermath. The paper first discusses about Bernie Madoff and his recognition; followed by an analysis of the investment firm through which he conducted the scheme. Afterwards, as Bernie Madoff was a very influential person, the paper looks into the government’s role during the lifespan of the fraud scheme. It also analyzes the mechanics and methodology of the scheme and the selection process of the investors as well as discusses the legal and technical association involved in the scandal and how the scandal was discovered; followed by an analysis of the loss incurred due to such a massive “Ponzi” scheme. Finally, it shows how the BLMIS was liquidated in an attempt to pay for the make up for the loss incurred to the investors. After analyzing the case, it provides some recommendations that could be used to prevent such devastating events from happening