Problem
Case study questions:
I. Why in your opinion did Bernard Madoff do this? He had been exceedingly successful in the electronic exchange trading that he had started and his firm continued, and he had clearly achieved both wealth and stature. What was it that drove him, again in your view, "off the cliff?
II. Why was it so easy for Bernard Madoff to raise so much money? The case describes a "network of trust and an aura of probity." How does a person build a network of trust and aura of probity? Give some thought here. It may help you to avoid a similar situation in the future.
III. The Wall Street Journal (August 20, 2009, p. B5) published three articles on the lessons that business schools should teach and business students should take away from the financial meltdown that had occurred. The huge Madoff investment losses were part of that meltdown. What are the lessons that you think are important from the Madoff investment fraud as part of that overall meltdown?
IV. What would you have done differently had you been (i) an advisor to a charitable organization that was investing substantial funds through Madoff; (ii) a member of a well-paid feeder fund that was collecting smaller amounts from middle income investors for transfer to Madoff; or (iii) a competitor who had reported to the SEC that the investment model Madoff was using was incapable of generating such large and consistent returns, but seen little happen?