Madoff Investment Security LLC Company

Fraud in the financial sector has been evidenced for a long time. Many companies have either suffered bankruptcy, or some have spent a lot of resources trying to fix a fraud case. Such is the case of Madoff Investment because in 2008, it was reported that, the company was running the largest investor fraud scheme (Ponzi scheme) orchestrated by an individual (Shedlock 1).Advertising We will write a custom research paper sample on Madoff Investment Security LLC Company specifically for you for only $16.05 $11/page Learn More Madoff investment securities was a wall street firm run by a successful businessman, Bernard Madoff, who also doubled as NASDAQ chairman, until his conviction in the Madoff fraud case. After the arrest of Bernard Madoff, it was uncovered that the fraud was worth more than $64.8 billion and Madoff investments had accrued liabilities of over $50 billion (Shedlock 1). Due to the magnitude of this fraud, Madoff pleaded guilty to 11 counts of felony, and this assertion subsequently led to his sentencing in a federal court. Until his arrest, Bernard Madoff ran a very successful company which he started, merely by investing $5,000 in Madoff investments, to be among the greatest players in the New York stock exchange (Shedlock 1). However, this flamboyant side of his business life never came close to the scandalous business dealings he did behind the scenes. The Madoff investment scheme led to the loss of billions of dollars in investment money, through illegal wire transfers, securities fraud, mail fraud, money laundering, perjury (and the likes), but surprisingly, half of the investors did not lose any money in the scheme (Brown 2). As a result of the fraud, several ripple effects have been evidenced in other companies, foundations and institutions which had business relationships with Madoff investment. Some organizations such as Robert I. Lappin Charitable Foundation, the Picower Foundation, and the JEHT Foundation h ave temporarily closed business because of the freezing of Madoff’s personal and business assets, because they depended on the investment firm to finance their operations (Brown 2).Advertising Looking for research paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Among the third parties faulted for letting Madoff’s fraudulent dealings thrive is the US Securities and Exchange Commission; meaning that, there were mechanisms and institutions in place to check such kinds of illegal financial activities (Jerusalem Post 1). However, in some way, such institutions failed to check the activities of Madoff investment firm; thereby allowing the thriving of fraudulent business transactions in the stock exchange. This goes against the mandate of such regulatory institutions because they are supposed to check the activities of financial companies, with the aim of protecting the interests of investors. Aim/Purpose From the Madoff financial scandal, this study seeks to establish appropriate mechanisms which can be established to minimize, if not completely eliminate, financial fraud in the stock market sector. Conceptual Analysis Madoff’s investment strategy was a blend of several investment strategies meant to cushion its investors’ money against the uncertainties of the stock exchange. One such strategy was the future adoptions strategy which the firm used to cushion its investors’ money against predictable events in the stock exchange; although almost concurrently, the firm was using Madoff’s sales pitch strategy which included purchasing blue chip stocks and taking options contracts which Brown explains as â€Å"Typically, a position will consist of the ownership of 30–35 S P 100 stocks, most correlated to that index, the sale of out-of-the-money ‘calls’ on the index and the purchase of out-of-the-money ‘puts’ on the index† (Brown 2). It was affirmed that, the â€Å"calls† ensured the price of stocks remained high and the â€Å"puts† ensured the price of stocks never went lower than what was anticipated. In interview excerpts done on Madoff, before his widely publicized arrest, he admitted that, he used future contracts on stock indexes and placed â€Å"put† options to see his company easily overcome the 1987 stock market crash in the US, but the biggest cover up to his fraudulent transactions came from a federal law which required companies to pay 5% of their returns (Brown 2).Advertising We will write a custom research paper sample on Madoff Investment Security LLC Company specifically for you for only $16.05 $11/page Learn More This provision allowed the Madoff fraud scheme to thrive because the firm could not be investigated, since it was largely managing charity money. Financial analysts say that, for every $1 billion in foundations deposits ma de with Madoff investments, the firm made $50 million in revenues, and this return was guaranteed because the firm specifically targeted charities to avoid the high rate of withdrawals witnessed with other investment entities (Brown 2). Madoff admitted that since the mid 1990s, his company never traded in the stock exchange and all the profits or returns associated with the firm’s financial books, during the same period, were fabricated; meaning that, the company’s wealth management wing was a complete hoax (Brown 2). Research/Investigation There was a deep sense of secrecy associated with Madoff’s operations because experts note that Madoff investment firm dealt with an exclusive clientele who were offered steady returns (not much) for a long time, as opposed to big returns; although the complexity was envisioned in the fact that, the returns framework adopted by the company to pay its shareholders was too complicated for the normal investor to understand (Tava koli 1). Furthermore, it is often said that, Madoff investment firm never publicly shared their financial investment documents with the public. Most of Madoff investment company’s operations and sales record also seemed to revolve around its founder, Bernard Madoff, as can be seen from his impeccable sales record, which saw the association of big investment firms such as Ascot partners with Madoff Investments. For instance, the association of the firm with Ascot partners saw Madoff investment receive up to $1.8billion in investment money (Chernoff 1). However, Madoff’s sales record was often marred with allegations that, its proprietor sourced clients based on religious and ethnic prejudices, especially based on the fact that, he was Jew and therefore used the same basis to gain trust among most Jewish investors (Marketing Doctor 1). There was also a sense of â€Å"oz† aura in the operations of Madoff investment because it was noted that, many of the companyâ₠¬â„¢s investors feared pulling out of the company because they would not find their way back into the company again (Chernoff 1). Though this aura characterized Madoff’s company operations, there were still a lot of evidences showing an inconsistent record of returns for the company.Advertising Looking for research paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More There were more allegations of inconsistent company performances, especially based on the fact that, whenever investors wanted to pull out their money from the investment fund, they always got checks, before their withdrawal (Chernoff 1). This act bred hesitation among the company’s investors to pull out. Moreover, there were instances where the company posted profits when the stock market was poorly performing. There was also unlimited access of Madoff and his investment firm to legislative power, and more so, powerful individuals in Washington (Chernoff 1). This association may not have been evidenced directly, but indeed, the company had access to some of Washington’s â€Å"high and mighty†, through subsidiary investment groups, affiliated with Madoff investments. There were further claims, purporting that the company had special ties with the Securities industry and Financial Market Association because Madoff Bernard sat in the board of the Securities Indust ry Association, which ultimately gave him a lot of access to information regarding the regulation and the intrigues of the stock market (Chernoff 1). In fact, it is reported that, some of Madoff’s family members sat in the board of the Securities industry and Financial Market Association (Chernoff 1). It is further reported that, the Madoff family was consistently making financial donations to the Securities industry and Financial Market Association, and more family ties were evidenced in the executive board of the Securities industry and Financial Market Association, since Madoff’s niece sat as an executive member of the compliance and legal division unit of the institution (Chernoff 1). Furthermore, she was married to a stock exchange commission employee – a relationship which obviously influenced the outcome of investigations into the Madoff financial fraud case (because the husband failed to investigate Madoff effectively) (Chernoff 1). It is important to no te that, the Security exchange Commission was supposed to investigate Madoff investments for allegations of financial impropriety and it unsuccessfully failed to uncover the financial fraud going on in the organization, for more than 16 years (Tavakoli 1). The Madoff family relationships (with some of the stock market independent institutions) are said to have bred the Madoff fraud because it was difficult for the independent institutions (supposed to investigate such frauds) to carry out their functions effectively, if there was internal interference from powerful individuals within the institutions (Tavakoli 1). From the above analysis, we see the apparent weak-points used by Madoff investments to perpetrate its fraud and effectively cover it up for a long time. Recommendations There are many lessons to be learnt from the Madoff investment scandal. From these lessons, several personal and policy changes ought to be initiated. On a personal level, the importance of risk management in any investment scheme cannot be overemphasized (Picerno 1). The common misconceptions among many investors are that, loss is hard to come by, and therefore, investors operate in a manner that predisposes them to financial dangers. Perhaps, one basic common skill to be factored in financial management is common sense. Often, there are many issues that affect an investor’s ability to assess financial risk, and some of these reasons include, ignorance, greed and sometimes, fear. Regardless, it is suggested that, any investor who ignores risk management is not any different from a driver who drinks while driving and expects that nothing will happen (Picerno 1). Sometimes an investor may get away with investing without a risk management plan, but if such a habit is upheld for a long time, the chances of experiencing financial losses are high. From the Madoff investment scandal, it is clear that, investors are supposed to posses very high risk management skills as the first proc ess of investment, before they decide to invest (because of a stock’s performance or any other reason) (The Opinion leaders 1). For instance, during the Madfoff financial streak, the stock market was definitely experiencing a difficult financial time and stock prices were quickly tumbling down. However, Madoff investment exhibited an unfamiliar stock price pattern which represented the investment firm as almost immune to the financial market crash. From this analysis, it therefore becomes clear that, though the investment firm was exhibiting a good stock market performance (while other companies failed in the same regard), 2008 still marked the year of its collapse and therefore the positive stock performance was in vain. Often, risk management is synonymously referred to â€Å"breathing† (in the human body system), and the supportive premise for this assertion is the fact that, it is easier to control risk than is previously thought, but it is not as easy to control r eturns (Picerno 1). For instance, for a stock exchange investor, trading in different equities, it becomes very difficult, if not completely impossible, to control stock returns. However, one cannot compare the risks associated with trading in one security as compared to trading in a pool of equities. Here, we see that, the risk of trading in one security is very high, but such a risk is effectively controlled when trading in several equities. The risk management situation can be further improved if other asset classes, such as bonds, are included in the same investment pool because investors will have more confidence that their investment risks are effectively minimized. From the Madoff scandal, we see that, risk management is an important tool in the successful management of investments, but more importantly, we see that risk management does not come as naturally to investors as it should. The Madoff investment fraud provides such a classic example to this assertion, especially af ter Wall street Journal (cited in The Wall Street Journal 1) provided this example: â€Å"A woman, we are told, lost virtually her entire investment portfolio, valued at $2 million. To quote from the story, in 2001, acting on the advice of her broker, she poured something close to her life savings into a hedge fund linked to Madoff. By October 2008, her account statement said her investment was valued at $3.8 million, according to the Journal. On Dec. 11, Mr. Madoff was arrested and confessed to a $50 billion Ponzi scheme. She lost the money† (The Wall Street Journal 1). From this analysis, we see that, it is very important for investors to have a risk management plan to safeguard their investments in the stock market. Undertaking this initiative would also reduce the chances of investment companies collapsing with investors’ funds Also, from the previous analysis of Madoff’s operational strategies, we can establish that, Madoff investment managed to hide its fi nancial fraud because of the ties it had with independent institutions that were supposed to investigate it. For instance, there were concerns voiced to the securities exchange commission about Madofff investments and its allegations of making excessive profits, without justifying its means (Binyamin 1). Such concerns were not effectively addressed, probably because Madoff’s family had substantial influence on the Securities exchange council. In this regard, it is important to establish that, institutions mandated to investigate investment firms should have complete autonomy from personal interests among investment companies. In other words, persons deemed to have conflicting interests in the running of such independent institutions should not be allowed to sit in their boards. If such a strategy was initially adopted, Madoff investment would not find it easy to cover up the scandal. Finally, though Madoff investments were a private entity, it should not be allowed to operate in a lot of secrecy, especially when the interest of the public is in question. In this regard, a policy should be introduced to legally require such companies to make public their financial statements (if the interest of the public is in question). This minimizes the chances of companies hiding illegal activities. Conclusion This study establishes that, the Madoff scandal thrived because of several weaknesses of system. The fact that Madoff had a lot of influence in the activities of the security exchange commission and Securities industry and Financial Market Association, posed a barrier to effective investigation of the activities of Madoff investment firm. Furthermore, the secrecy in which the company operated created a sense of misinformation among the company’s investors and no one knew the formula used by the company to generate â€Å"strange† profits. To this extent, this study proposes several policy changes to increase the independence of independent institu tions in the running of the stock market, plus remedial actions to improve the transparency of private institutions. On a personal level, this study proposes to investors that effective risk management strategies ought to be practiced whenever investors transact in the stock exchange. A combination of these efforts would minimize the occurrence of financial frauds in the stock market. Works Cited Binyamin, Appelbaum. All Just One Big Lie. 13 December. 2008. Web. http://www.washingtonpost.com/wpdyn/content/article/2008/12/12/AR2008121203970.html?hpid=topnews Brown, Rebecca. How The Madoff Investment Scandal Was Uncovered. May. 2009. Web. http://www.articlesbase.com/law-articles/how-the-madoff-investment-scandal-was-uncovered-927189.html#axzz4x9xbWBIg Chernoff, Allan. What drove Bernie Madoff. 5 January. 2009. Web. http://money.cnn.com/2008/12/26/news/companies/understanding_Madoff/?postversion=2008122608 Jerusalem Post. Madoff Investment Scandal. nd. 2011. Web. http://www.jpost.com/t opic/Madoff_investment_scandal Marketing Doctor. Learning From A Ponzi Scheme – Madoff Knew His Target Market. 18 December. 2008. Web. http://blog.marketingdoctor.tv/2008/12/18/marketing-advisory-madoff-knew-his-target-market.aspx Picerno, Jim. The Madoff Scandal: What Are the Lessons Learned? 23 December. 2008. Web. Http://Www.Greenfaucet.Com/?Q=Node/4971 Shedlock, Mike. Biggest Fraud in History $50 billion Madoff Ponzi Scheme. 13 December. 2008. Web. http://www.marketoracle.co.uk/Article7769.html Tavakoli, Janet. Madoff Deserves Lots of Company. 9 March. 2009. Web. http://www.tavakolistructuredfinance.com/TSF11.html The Opinion leaders. Lessons from the Madoff Scandal: Deciding Which Funds Are  Worth an Investment. 30 December. 2008. Web. http://seekingalpha.com/article/112568-lessons-from-the-madoff-scandal-deciding-which-funds-are-worth-an-investment The Wall Street Journal. The Madoff Case: A Timeline. 12 March. 2009. Web. http://online.wsj.com/article/SB11296695423127 2304.html?mod=googlenews_wsj This research paper on Madoff Investment Security LLC Company was written and submitted by user Amber K. to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.

Summary about Romanesque architecture period

Summary about Romanesque architecture period Romanesque architecture period is one of the most cherished periods in the history of architecture. During this period, several buildings were constructed which have remained fascinating in Europe and attractive to people around the world. This essay gives a summary of the Romanesque architecture period, highlighting some of the major events which took place during this period including historic buildings and structures which continue to symbolize this period today.Advertising We will write a custom essay sample on Summary about Romanesque architecture period specifically for you for only $16.05 $11/page Learn More According to historic findings and recordings, Romanesque architecture thrived during the Medieval or Middle Ages and was highly associated with Normans. In general, Romanesque architecture usually refers to structures which were constructed and used from 800 AD to 1100 AD (Sacred Destinations 1). It has arguably been mentioned that this type of a rchitecture generates major confusion as it relates closely to the architectural designs during the Roman Empire. Notably, Romanesque architecture was originally designed by the Normans after the fall of the Roman Empire. Of importance is the fact that the history of Romanesque architecture was primarily linked to the dedication of people to religion, a fact that resulted into the construction of several churches in England which adopted Romanesque design. Many people who visited the Holy Land admired magnificent architectural work done by the Byzantine Empire. This admiration caused a revolution in architecture, castle building ideas and engineering during the Romanesque architecture period (Browne 4). As mentioned above, the existing interest in religion during Romanesque time necessitated construction of buildings which could conveniently accommodate huge crowds in places like Santiago. Due to huge crowds flocking these places, basilicas were unable to hold them resulting into th e need to have the buildings designed to have the shape of a cross. Additionally, architects adopted this design because they wanted to do away with wood as the main construction material (Castles 1). They therefore began using stones, groin and barrel vaults to make ceilings for most of the churches. Although this was adopted, ceiling weight overpowered walls forcing architects to pile stones along the walls for the purpose of supporting them and preventing them from being pushed outward. Alternatively, architectures opted to use thick walls which could withstand the heavy weight of ceilings emanating from ceiling stones. This resulted into the use of small windows, making the interior of most churches to be dim (Sacred Destinations 1).Advertising Looking for essay on architecture? Let's see if we can help you! Get your first paper with 15% OFF Learn More Moreover, the Romanesque architecture period has been referred to as the Age of Monasticism during which monastic homes became common as they attracted the attention of religious people and scholars. This period also coincided with the Crusades Age when Christians were determined to restore freedom for Holy Lands (Castles 1). These events promoted economic growth through trade, construction of infrastructure like roads and the expansion of the construction industry to meet extra demand for buildings. In analyzing this period, Norman is also considered as one of the most significant modifications of the Romanesque architecture in Normandy, France. It is believed that the interior of St. Etienne clearly illustrates evidence why Norman architecture remains the most advanced construction design of the period (Sacred Destinations 1). Its interior displays a complex design depicting the Gothic style of construction. Notably, the round Roman arch is gives the main difference between Gothic designs and Romanesque architecture. Although there were other construction styles, Romanesque architec ture influenced construction engineers across Europe. This was common in the construction of churches in England which were later converted into cathedrals (Sacred Destinations 1). Even though a good number of the cathedrals were constructed in different ways, Norman styles were also applied especially in the nave arcades. It is important to mention that the Gothic arches of Winchester Cathedral were developed from Norman piers curved by masonries. This was also witnessed in parts of Italy where churches like the Florence Cathedral was built based on the Gothic style (Castles 1). It comprised of the sturdy columns which portrayed a tailored version of the Corinthians. Architects made use of the pointed vault as it was used together with the semicircular arches. Based on this assumption, many analysts have argued that most facades of Gothic churches in parts of Italy are almost indistinguishable from Romanesque as they have a wide range of similarities. Similarly, the Romanesque peri od was an important time that led to defensive architecture manifested through design and architecture in most parts of Europe. Although these architectural designs were common to churches and monastic buildings, it extended to castles and other buildings during the same period (Sacred Destinations 1). Despite the fact that most of these buildings have been ruined throughout history as a result of war and politics, there are some which have remained intact. A good example is the White Tower found within the Tower of London, constructed by William the Conqueror as his stronghold and residence (Castles 1). In parts of Germany, palaces were mainly built for bishops and rulers as wealthy merchants used Romanesque architecture to build their homes in towns.Advertising We will write a custom essay sample on Summary about Romanesque architecture period specifically for you for only $16.05 $11/page Learn More Based on the above analysis, it is evident that Romanesq ue architecture period was a significant time in the history of several architectural designs. The influence of this period has remained evident from buildings around the world which were constructed during this period. Browne, Edith. Romanesque Architecture. Whitefish, Montana: Kessinger Publishing, 2005. Print. Castles. Romanesque Architecture. Castles, 2011. Web. ancientfortresses.org/romanesque-architecture.htm. Sacred Destinations. Romanesque Architecture. Sacred Destinations, 2011. Web.

Professional ethics Essay Example | Topics and Well Written Essays - 500 words

Professional ethics - Essay Example The professional ethics usually go in line with the moral ethics, placing expectations to the members of the profession to act in a morally permissible manner. Examples of common professional ethics that cut across all professions include loyalty, transparency, integrity, honesty, among others. Some professionals such as medical practitioners have their own universal code of ethics which are observed world-wide by all the members of that profession. All medical doctors have to abide to the ‘Hippocratic oath’, which is their universal form of professional ethics. Professional ethics are very important not only for the professionals but also for the members of the public. They place some responsibilities on members of a certain profession in line with the training and expectations of the society from the professions. For example, professional ethics of a police officer give him or her responsibility of maintaining law and order, preventing crime and ensuring the general wellbeing of the society. It would thus be against the professional ethics of a police officer if a crime is committed in his presence and the officer does not respond to the situation. On the contrary, an ordinary citizen or member of another profession who has no training in law enforcement will not be held responsible for being unable to stop a crime in progress as that is not his/her responsibility. Professional ethics also aid in ensuring optimum service delivery by members of a profession by maintaining discipline within the profession. For example, professional ethics expect members of a profession always to strive to deliver as per the main objectives of the profession without looking at monetary gain. This means that for one to be a member of a given profession, he or she must have a passion and will to serve the people as per what the society expects of them without looking at how much he/she will gain from doing so. For example, it is professional ethics that