Tweet
The renegade Wall Street fund manager Bernard Madoff has been placed under curfew and ordered to wear an electronic tag after failing to find anybody outside his family willing to sign surety for his $10m (£6.5m) bail.
As America's financial regulator offered an extraordinary admission of "multiple failures" in missing red flags over Madoff, the alleged $50bn fraudster was confined by a judge to his Manhattan apartment and was told, along with his wife, to surrender his passport.
Investigators say Madoff's financial records are riddled with falsifications and are "utterly unreliable". The list of his victims grew yesterday to encompass more finance houses, charities and individuals, including the disgraced New York politician Eliot Spitzer, who revealed his family's firm had investments with Madoff.
In the face of mounting anger over apparently lax oversight, the Securities and Exchange Commission confessed that it had received "credible and specific" allegations of wrongdoing by Madoff dating back to 1999 - but no action was taken.
"I am gravely concerned by the apparent multiple failures over at least a decade to thoroughly investigate these allegations," said the SEC's chairman, Christopher Cox, who described initial findings as "deeply troubling".
Compounding questions about the SEC's role, it emerged that Madoff's niece Shana, who was chief compliance officer at Madoff Securities, last year married former senior SEC investigator Eric Swanson, who supervised a team which once looked into Madoff.
In Washington, a congressional panel said it would convene an inquiry into the failure of regulation surrounding Madoff. At Manhattan's federal court, a judge revealed that Madoff had failed to come up with four "financially responsible" people willing to co-sign his bail bond. The only two willing to do so were his wife, Ruth, and his brother, Peter. But in return for strict restrictions on Madoff's movement, the court allowed the financier to stay out of prison.
Victims of Madoff's scam include HSBC, Royal Bank of Scotland, Nicola Horlick's Bramdean Investments and scores of banks, charities, and hedge funds around the world. Foundations attached to the film director Stephen Spielberg and the Holocaust survivor Elie Wiesel are among those losing money.
In France, shares in BNP Paribas slumped after losses related to Madoff.
Financial institutions which lodged clients' money with Madoff could face lawsuits from customers accusing them of failing to carry out adequate due diligence on the fund manager.
Jeffrey Zwerling, a lawyer representing victims, said of his clients' reactions to the scandal: "We've had shock, we've had some anger, and in some cases, resignation. Then there's a little introspection, people looking back and asking: Why did I put everything into this?"
He described Madoff's fund as "not even a house of cards - it's an empty house".
While Madoff's firm is thought unlikely to contain any money, experts say the authorities could pursue agents and administration firms used by Madoff Securities on the grounds that they received money under false pretences.
Nick Day, chief executive of fraud investigation firm Diligence, said: "I suspect it will take months and months to get legal approval for the SEC and others to find where the money may have gone. Money moves across borders very quickly."
Long considered a pillar of the Wall Street community, Madoff allegedly made a bombshell confession to his sons last week that his fund was a "giant Ponzi scheme". He is thought to have kept two entirely different sets of records - one genuine and one for show.
Stephen Harbeck, president of the Securities Investor Protection Corporation which is liquidating Madoff's firm, said his staff had found "two sets of books, in complete disarray".
guardian.co.uk © Guardian News & Media Limited 2008 | Use of this content is subject to our Terms & Conditions | More Feeds
More...
