# Bernie Madoff: “The banks had to know.”

**URL:** <https://boards.straightdope.com/t/bernie-madoff-the-banks-had-to-know/571955>\
**Category:** Factual Questions\
**Created:** [February 20, 2011, 12:35am UTC](https://boards.straightdope.com/t/bernie-madoff-the-banks-had-to-know/571955 "2011-02-20T00:35:52Z")\
**Posts on this page:** 3\
**Page:** 2

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**Author:** ![Saintly\_Loser](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/saintly_loser/32/4045_2.png) [@Saintly\_Loser](https://boards.straightdope.com/u/Saintly_Loser)\
**Post date:** [February 23, 2011, 6:04pm UTC](https://boards.straightdope.com/t/bernie-madoff-the-banks-had-to-know/571955/21 "2011-02-23T18:04:09Z")

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> [@handsomeharry](#):
>
> Just because they have massive resources doesn’t mean that they \*should \*monitor anybody, or investigate what crimes anybody may be committing.
> 
> Best wishes,  
> hh

Not so. We’re talking about investment banks here. They were putting money, their own and their clients’, into Madoff’s funds. Of course they should monitor what’s going on. They have a duty to their investors and their clients. And at least some of them were told, by their own accountants, by their own employees, that Madoff was running a scam. And yet they didn’t stop doing business with him, because they were making money.

If investment banks or hedge funds, with their massive resources, have no obligation to monitor anybody, or investigate what anyone is doing with money placed with them, why shouldn’t they just invest their money with, say, Pablo Escobar? He probably could have produced some great returns on that money. And if one doesn’t look too closely, or ask any questions about where the money is coming from, well, that’s not the bank’s concern, right?

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**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\
**Post date:** [February 23, 2011, 6:50pm UTC](https://boards.straightdope.com/t/bernie-madoff-the-banks-had-to-know/571955/22 "2011-02-23T18:50:43Z")

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I think the whle point is:  
(a) anyone in the business who thought deeply about it recognized the returns were just too good. Sometihng was going on.  
(b) when you are talking in the billions of dollars, someone somehwere had to notice that billions in shares were not changing hands. There’s a limited number of seats on the exchanges, and a limited number of companies that would handle a few billion in churning each month. Someone must have wondered. I doubt the legit side of the business even came close enough to cover for the mising billions in trades.

The reports of faked transactions Madoff and (allegedly) a few cronies produced in the back rooms - Bernie must have spent all his spare time concocting these reports, or else they were so sloppy that it’s amzing nobody caught on sooner, or cross-referenced them against actual transaction volumes. If you claim that you just traded $100 million of GM or Monsat, smeone someday might notice that the whole market barely traded that much; and if they worked for a big company that also traded, they might notice the discrepancy.

Maybe that was Bernie’s selection criteria for new investors - don’t pick anyone who might know the business and pick at the reports too closely.

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**Author:** ![astro](https://avatars.discourse-cdn.com/v4/letter/a/9dc877/32.png) [@astro](https://boards.straightdope.com/u/astro)\
**Post date:** [February 24, 2011, 2:56am UTC](https://boards.straightdope.com/t/bernie-madoff-the-banks-had-to-know/571955/23 "2011-02-24T02:56:24Z")

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> [@ralph124c](#):
>
> Yes-simple logic: Madoff ran his con for 25+ years-not one investigation (launched by any one of his employees) was ever launched.  
> Pretty good proof that none of them talked-or if they did, they were ignored.  
> Just like ENRON- Skilling sent out totally worthless statements-it was a investment firm that started shorting the stock (their analysts didn’t believe Enron’s claims).

In various stories I’ve read the “low level employees” were VERY well paid relative to what they might normally have commanded in salary elsewhere, and some were part of the scheme.

[http://www.thedailybeast.com/blogs-and-stories/2010-12-21/madoff-secretary-annette-bongiorno-jailed-over-ponzi-millions/?cid=tag:all1](http://www.thedailybeast.com/blogs-and-stories/2010-12-21/madoff-secretary-annette-bongiorno-jailed-over-ponzi-millions/?cid=tag:all1)

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