Historical fraud by Bernard Madoff

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Using Madoff’s financial crime event:
-Compare the selected event to the legislation enacted in reaction to it (the wrongdoing) (e.g., Sarbanes Oxley after Enron, Dodd Frank after the subprime mortgage crisis, etc.)
Identify any enforcement tools that were provided to the SEC, DOJ and/or other law enforcement to help bring wrongdoers to justice.
-Explain how the legislation reduced the prospect of such misconduct occurring again in the future or, alternatively, if the legislation missed the mark and, if so, why.
-Argue whether the legislation enacted damaged the objective of promoting capital formation, economic development or other economic interests.

Sample Solution

The Bernard Madoff financial crime event of 2008 was one of the largest and most damaging Ponzi schemes in US history. It resulted in estimated losses of over $18 billion dollars for thousands of victims (Brennan 2020). As a response to this , Congress passed the Dodd-Frank Wall Street Reform Act which outlined two main goals :1) improve transparency and accountability amongst banking operations 2) Increase consumer protection through new regulatory bodies such as the Consumer Financial Protection Bureau (CFPB ) (Lofchie 2015).

To help bring wrongdoers to justice, the SEC was provided with greater investigative powers while being allowed to issue larger fines when necessary . Furthermore, whistleblowing programs were created encouraging individuals to report potential cases involving fraud or corruption (Timmons & Anderson 2012). Additionally, both the Securities Exchange Commission and Department Of Justice were authorized to seize assets from those found guilty which could then be used for reparations where applicable.

The legislation also included new rules aimed at preventing similar events from happening again . Firstly, firms are now required to separate their proprietary trading activities from customer funds thus making sure that clients’ investments remain safeguarded. Secondly , independent auditors have been mandated regularly review accounts in order identify any discrepancies that might indicate something suspicious is going on( Lofchie 2015 ). Lastly, credit rating agencies have been given additional authority allowing them greater insight into companies’ financial records thus making it harder for corporations take part in unethical practices like insider trading etc.( Timmons & Anderson 2012).

In conclusion ,the Dodd-Frank Wall Street Reform Act provides significant enforcement tools helping law enforcement bring wrongdoers like Bernie Madoff and others responsible for similar crimes to justice while simultaneously increasing transparency among banking operations as well as consumer protections. Through its various rules it also attempts limit chances of misconduct occurring again by separating companies’ proprietary trading activities from customer funds as well as giving credit rating agencies more authority when reviewing financial records.

2.1 Sources of data

 

Data is fundamental to each examination venture, and given the vagueness in the idea of data it is fundamental to guarantee that data gathered is pertinent and suitable for some random exploration, investigation and so on. There are 2 fundamental data sources: essential and optional sources.

 

2.1.1 Primary source

 

Essential sources are direct reports that give direct proof on a topic. They Library of Congress allude to them as the “unrefined components of History” (Sotheby’s Institute of Art, n.d.). Models incorporate; interviews, letters, ancient rarities, diaries and witness articulations.

 

2.1.2 Secondary source

 

Auxiliary sources are translations and assessments of essential sources. They are not proof but instead critique on and conversation of proof (Sotheby’s Institute of craftsmanship, n.d.). As such this could be articles, or examine on another person’s unique examination.

 

2.2 Methods of Information Gathering

 

With the end goal of this report, I utilized just optional wellsprings of data. This data has been gathered from different mediums, including:

 

2.2.1 Text Books

 

These were an extraordinary wellspring of information as they worked on how I might interpret different speculations for instance SWOT, PEST, which assisted me with performing better examination. I likewise did a survey of monetary proportions, seeing every proportion and their importance. A portion of the books I utilized were ACCA course books (BPP F7, F9, P3), Finance and Accounting in business second version (Bob Ryan, 2004).

 

2.2.2 Annual Reports

 

The yearly reports contain the yearly outline of an association, the budget summaries and monetary features. This gives a perspective on the association according to the point of view of the chiefs and was hence a significant device that aided my examination. I involved the yearly reports for both Fresnillo Plc and the benchmark Tahoe Resources Inc.

 

2.2.3 The Internet

 

The web was an incredible source giving admittance to a huge scope of data. This was made conceivable using web indexes like Google, hurray, Bing search among others. This gave me admittance to books, articles, diaries, reports, pamphlets, business channels, and sites which gave a ton of information.

 

2.3 Limitations to data gathering

 

One of the serious issues I confronted was having the option to secure applicable data. With the web being one of my significant wellsprings of data, there was the gamble of a portion of this data being incorrect. Getting explicit data relating to Fresnillo was testing.

 

It was unrealistic to get fiscal reports in succeed design in this way I needed to separate them from the yearly explanations which were in pdf designs, which then required further changes, making it more vulnerable to blunders.

 

Another significant restriction was that I couldn’t get sufficiently close to specific business diary information bases which required premium memberships like Financial Times, and BNamericas.

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