BMW expansion in China Research Paper Example | Topics and Well Written Essays - 3750 words

BMW expansion in China - Research Paper Example It is said that the global wealth is slowly shifting from the European and American region to the more heavily populated Asian region at present. Many of the prominent companies in the world are now looking towards Asian region for growth or expansion prospects. China and India seem to be the number one and two targets of prominent American and European companies. China is the most heavily populated country in the world at present. Moreover, China is growing more rapidly than any other country in the world now and many people believe that China may replace United Sates in near future as the topmost economic power in the world. According to Keidel (2008), â€Å"China’s economy will surpass that of the United States by 2035 and be twice its size by midcentury† (Keidel, 2008). â€Å"The inflation rate in China was last reported at 4.4 percent in October of 2010. From 1994 until 2010, the average inflation rate in China was 4.25 percent reaching an historical high of 27.70 percent in October of 1994 and a record low of -2.20 percent in March of 1999† (China Inflation Rates, n. d) (See Appendix for more details). Moreover, â€Å"during 1997–2005, the PRC’s average annual growth rate in real GDP was 8.9%. During the forecast period of 2005–2010, it was assumed that the PRC continued its historical growth trend of 8.9% per year† (Mai et al, 2010, p.5). ... Even though huge population was a big barrier in front China’s march towards economic growth, they succeeded in converting this barrier in to a blessing and economists forced to rewrite many of their economic principles. Now China is a prominent labor supplier for the rest of the world. Even though Mao is still believed as a prominent leader in Chinese history, Deng was the actual leader who put bases for China’s rapid economic progress. Mao was adamant about communist principles whereas Deng succeeded in giving practical definitions to communism in China. In short, China is the most rapidly growing country in the world at present and most of the prominent companies are now focusing more on China for expansion prospects. The BMW Group in the US reported March (2009) sales of 21,125 vehicles, a decrease of 22.9 percent over the 27,404 vehicles sold in the same month of 2008. For the first quarter, The BMW Group also reported a year-to-date sales volume of 51,244 vehicles , down 25.2 percent, compared to 68,529 vehicles sold in the same period a year ago (BMW Sales Remain Low Down 26.8% - Mini Sales Decline 15.9% In March) BMW was a leader in automobile manufacturing till a couple of years before. However, same thing cannot be said about BMW at present because of the huge competition it faces from other automobile manufacturing companies along with the technical problems of tis vehicles. America and Europe were the most important markets for BMW earlier. However, the financial problems in these regions forced BMW to shift its focus towards more prosperous Asian region. This paper analyses how BMW was developed and is evolving in China, focusing more on areas like Positioning for Greater Global Competitiveness, Improving Globalization of Markets and

Developing Evaluative Skills Through Critiquing Quantitative Research

Developing Evaluative Skills Through Critiquing Quantitative Research Nursing is becoming a progressively evidence base profession. Arguably, Nightingale first popularised the link between nursing theory, nursing practice and research to inform an appropriate evidence base, and progress towards this goal has been ongoing ever since (Graham 2003). In nursing, a critique is often seen as a first step in learning the research process. However, conducting a critique is not a basic skill (Burns and Grove 2004). The Nursing and Midwifery Council (NMC, 2008) ruled it mandatory for the pre-registration nursing curriculum to teach EBP as a fundamental principle of proficiency. Research has become a priority for nurses of all specialities. This paper seeks to demonstrate how these evaluative skills can be developed by critiquing a quantitative research study. An acknowledgement of the credibility of the authors, the publishing journal, and the methods used the data collection and analysis, findings, ethical issues and the strengths and weakness of the research is made. The paper will be considered using the CASP critique tool for methodological consistency and ease of presentation (CASP 2000); shown in appendix 1; a copy of the tool is enclosed. The article, on which this critique research is made, was published in the journal of Advanced Nursing. The title of the article is, Tablet-splitting: a common yet not so innocent practice. The title of this article outlined above, is seemingly clear and explicit, although not as concise as Frances et al,(2007) would prefer; between ten and fifteen words. The title of this paper suggests that tablet splitting is a common practice, which is probably true, but it suggests that it is not so innocent, which smacks more of journalism than an academic paper. It is possible that the original Belgian text does not translate perfectly into English and this may be a translational syntactical inaccuracy. The article was accepted on 6 August 2010 and it was published in the Journal of Advanced Nursing 67(1), pages 26-32. Elsevier (2009) State that they only print manuscripts that have been peer reviewed with any necessary revisions made. This is favourable for the credibility of the article as the reader is assured that it has been scrutinised by an independent body of a similar field to the author/s. Elsevier also clarifies that the author must have the appropriate clinical and educational credentials for the research study. The four authors are all highly qualified, each with a PhD, three in academic pharmacology and a fourth who is a professor of geriatrics. A substantial literature search does not show any other publications by these authors. Quantitative research is formal and objective research that is concerned with collecting and analysing data that focuses on numbers and frequencies, rather than meaning or experience, it examines cause-and-effect interactions among variables using a systematic process (Burns and Grove, 1997; Ogier, 1999). The research that has been carried out for this published paper is an example of quantitative research and has been carried out using a randomised control trial method. A randomised control trial (R.C.T.) is a true experiment characterised by the manipulation of the independent variable, random assignment of individual subjects to the conditions and all other factors being controlled (Ogier, 1999). The R.C.T. was carried out as a small study in which five volunteers were asked to split eight tablets of different sizes and shapes, including medicines for Parkinsons disease, heart failure and arthritis. Participants used three different methods to split their pills: a splitting device , scissors or manual spitting for scored tablets, and a kitchen knife. In the article under scrutiny, the authors point out the fact that it is observed to be common clinical practice, particularly in nursing homes, to split tablets so that a proportion of the tablet dose can be conveniently given. This can be for economic or purely practical reasons as tablets are often supplied from stock and not always in the exact form or dose prescribed. They cite a German study in support (Quinzler et al 2006) which found that nearly 25% of administered drugs were split. It should however, be noted that on closer inspection, the Quinzler study is not particularly relevant to the UK situation, has a number of serious methodological errors and also did not consider a wide spectrum of clinical applications, nor is it in close agreement with other studies in this area. Its findings therefore are not particularly generalizable and are a poor choice of evidence in support of this paper. There is no doubt however, from taking a further overview of the available literature, that tablet-splitting does occur with a degree of regularity in clinical situations, and as such, the authors consider this investigation justified. The Abstract in this case is perfectly adequate, outlining the main points of the study. The main contentious issue is a comment in the Abstract conclusion which states that Large dose deviationsà ¢Ã¢â€š ¬Ã‚ ¦. occurred when splitting tablets (Verrue et al 2011, p.26), a comment which is not actually borne out by the findings of the study. Close inspection of the results suggest that deviations of more than 25% of the original tablet mass occurred in 19% of cases, but the authors included those cases where one half spontaneously split further, and therefore would have no real clinical or practical significance. It has also to be noted that there is no indication in the abstract, of the methods of sample selection or whether this was in any way a controlled trial. It does however; serve the prime objective of an Abstract, which is to offer the reader sufficient information to determine whether further reading of the article would be appropriate (Robson 2006). The Introduction is comparatively short. The point about the citation of the Quinzler study has already been made, but the rest of the Introduction effectively sets out the rationale for the study, together with the justification for clinical relevance. It has to be observed that the literature review is comparatively brief with some comparatively old papers being cited (Barker et al 1982 and Babbington 1997) when there are a number of perfectly respectable authorities to make the same points that are much newer and would therefore be considered both more relevant and appropriate (Coombes et al 2009). The aims of the study are clearly stated, although the actual study design is not. It requires further reading through the paper to actually determine the methodology used (this is found under data collection), the sample selection, (this is found under Discussion which is really quite inappropriate) and also the means of determining the results (also found under data collection). It is also the case that the clinical significance of the rationale for the study is neither explicitly set out nor addressed. This is very relevant to the issue of tablet-splitting as if, as the cited literature suggests, there is a 25% variance in actual dose administration after splitting, then the degree to which it could be clinically important should be presented. One could suggest that in all but the most extreme cases, a 25% variation in the dose of Aspirin given is not likely to be hugely clinically significant, whereas a 25% variation in the dose of a cytotoxic drug may have profound consequences for the patient. There is no real consideration of this point, nor any concession to its absence (Polgar et al 2000). This element of the review of the literature in the introduction therefore has major deficiencies. The study design is quantitative in nature. The authors have used five healthcare professionals for the task of tablet-splitting. One has to read through to the study limitations segment to determine that the authors used an administrative co-worker, a laboratory technician, a pharmacy student and two pharmacists as the study cohort. On reflection, this seems a strange choice, as it is neither homogenous nor rational, as none of these groups are likely to be involved in tablet-splitting in the situation of the nursing home, which the authors have chosen to investigate (nor many other clinically relevant situations, in all probability). This choice seriously weakens both the generalizability of the findings and also the applicability of the study to the clinical evidence base for nursing. Another major shortcoming of the methodology of this paper is the fact that the authors included cases where the tablet split into more than two pieces as deviations from the mean. In most clinical situations the administration of a tablet, which has split into two halves, and one half has then broken further, is no less accurate if the pieces are administered as one piece or as several. The authors make no concession on this point and therefore are likely to significantly overestimate the inaccuracies in their findings. (Schulz et al 2005) Issues of sample selection have already been addressed above. Sample size appears to be completely arbitrary with a total of 1,200 operations spread over the group being considered a reasonable sample size. It is usual, in academic studies such as this to see calculations of minimum sample size to determine the power of significance. Its omission further reduces the applicability of the study (Rosenthal 2004). The ethical considerations are explicitly addressed, as ethical committee approval was not required because patients were neither involved nor personal details recorded (Bowling 2002). Some of the elements of bias and limitation have already been addressed. The results obtained have been subjected to a modest degree of statistical analysis with a one way ANOVA and a Turkeys post hoc analysis being carried out. One has to observe however, that the nature of the study is such that a more sophisticated data analysis is not really appropriate (Argyrous 2000). The results are presented in a clear and logical fashion, with 5 tables showing how the results were distributed. It is clear from the presentation of the results exactly what the authors have found; for example using a splitting device was the most accurate method. It still produced a 15 to 25 per cent error margin in 13 per cent of cases, but this was lower than the 22 per cent for scissors and the 17 per cent for the knife. Further critical reading is not necessary in this respect. An interesting feature of the study is the fact that weight loss of the tablet occasioned by the splitting process has also been determined, for example some tablets were much easier to split accurately than others. The easiest to split produced an overall error margin of 15 per cent deviation or more and the most difficult tablets produced an error margin of 19 per cent. Closer examination of the results however, shows that this does not just reflect the amount of material lost as powder or small fragments, as one might initially consider, but also the amount of the tablet that was inadvertently dropped on the floor. The authors rationalised this on the basis that a tablet, once having been on the floor, would not be subsequently given to the patient, which although undoubtedly true, does rather distort the results that are presented (Rosner 2006). The discussion element of this paper is something of a disappointment. The first element is a consideration of the study limitations, which entirely appropriate (Gomm et al 2000). The authors spontaneously point out the fact that the clinical effects or consequences of their findings are not presented (Verrue at el 2011 p. 29). This is a major detraction from the usefulness of this paper and would make the interpretation of the results by a non-clinician more difficult. The authors also concede that no nurses were selected for the experimental splitting group. This is quite remarkable, as one could intuitively suggest that it would be nurses, of various grades, who would actually be responsible for tablet-splitting in the vast majority of clinical circumstances. It is actually of little practical relevance for nursing homes to be able to understand how effective a Professor of Pharmacology is at splitting tablets. The authors go on to compare and contrast their findings with other work in the area (Mcdevitt et al 1998,Birton et al. 1999, Peek et al. 2002, Teng et al. 2002, Cook et al 2003) and point out the similarities and differences in their findings. This is an entirely appropriate and useful segment with the authors pointing out the specific fact that this type of study has not been done before and also that much of the similar work in this area is already a few years old (Verrue et al 2011 p.30) The discussion segment also notes that we aimed at providing nursing homes with advice for the best tablet-splitting technique in daily practice (Verrue et al 2011, p.30). One would suggest that this is not in congruence with the stated aims of the study (although it is tangentially relevant). One could also observe that the one thing that this study does not do, is to offer nursing homes a suitable evidence base on which to base their practices, as no clinically relevant staff were involved in the study. Some of the participants are unlikely to have a concept of the clinical significance of exactly halving the dose of the medication. This is a low grade study which had the potential to make an impact on the evidence base in an important clinical area. The methodological shortcomings and a lack of generalizability, greatly reduce any possibility of such an impact. The paper, although superficially well presented, with an admirable display of tables and easy to interpret data, has major flaws which become apparent on even the most superficial levels of critical analysis. The initial interest generated by a reading of the Abstract, did not translate into clinically useful data which could be applied into everyday nursing practice. An overview of the methodology suggests that the authors might have made a significant contribution to the evidence base in this area with a little more forethought and pre-study design consideration. This belief is given credence by the fact that the authors criticise themselves in the Study limitations segment, in areas which could quite reasonably have been considered before the actual investigation took place. This study does not materially contribute to the evidence base in this area. Appendix 1 Quantitative Research Papers Critiquing Tool A Framework for Critiquing Quantitative Research Papers Include full reference of paper here: (i.e. Author/s (date) Title of article. Journal title. Volume, Number, page numbers.) Critiquing Framework Title of Paper Is the aim or purpose of the study clear? Are the main variables of interest indicated? Is the study design or research method clear from the title? Is there any reference to the population from whom the data are collected? The Abstract/Summary Does this summarise the whole study? Is information provided regarding background, literature, aim/and objectives, hypotheses (if RCT), methods, sample size, measures used etc, results and conclusions? Does it suggest that a more detailed reading of the rest of the paper would be worthwhile? Introduction/Literature Review Background/rationale Why was the topic chosen, what is the background to the study? Is there a critical review of previous literature and related theoretical concepts? Are gaps in the literature identified? Aim and objectives What problem or issue is being investigated? How clearly is this problem or issue defined or explained? Is there a clearly stated aim? Do the research objectives or research questions support this aim? Are the variables of interest clearly defined `and are relationships between these evident and clearly stated? Which are the independent and dependent variables? Are hypotheses (if RCT) stated in a way that makes them testable? Method Research design What is the study design and is it clearly explained and appropriate for the research questions? Could the design be improved? Was there a pilot study? Research questionnaires What measures are used? Are validity and reliability reported for these measures either in the paper or clearly referenced? Have the authors dealt appropriately with any unreliable questionnaires or scales? Sample Is the population appropriate for the research question? How were the sample chosen? What is the sample size? Are statistical power considerations discussed? Are inclusion and exclusion criteria described? Can the results be reasonably generalised on the basis of this sample? Ethics Are ethical considerations presented. Is it suggested that ethical approval was granted? Results/Findings/Data analysis Does the paper explain clearly how the data are analysed? Are statistical techniques clearly and adequately described? Are the statistics presented at a simple descriptive level or are inferential statistics also included? How are the results presented? Does the text adequately explain any tables or graphs? Have any tests of significance established whether differences, or associations, between groups could have happened by chance? What p values are used? Are non-significant results clearly indicated? Discussion Is the discussion an accurate account of the results? Could there be other ways of interpreting the data? Does the discussion address the research aim and objectives? Are all the research questions answered? Conclusion Are the conclusions of the study consistent with the results of the statistical analyses? Are alternative conclusions suggested? Are theoretical and practical implications of the results adequately discussed? Are the recommendations suggested feasible? Limitations What are the limitations and are these acknowledged by the authors? Overall impression (CASP 2000)

The Miller Essay -- essays research papers

The Miller The Miller is not in the tale, but is as vivid a creation of Chaucer as characters that are. The Knight presents us with an ideal to which he probably aspires; the Miller presents us with the real everyday world. While the Knight stresses the nature of romantic love, the Miller considers love in sexual terms. Neither view alone is wholly true. Each is a corrective to the other: love embraces both of these elements. This paper will describe The Miller’s characteristics, his humor, his education level, and his habits. Like the Wife of Bath, the Miller is a character of commanding physical presence: he is a massive man who excels in such displays of strength as wrestling matches, and breaking doors "at a renning with his heed". He is a bearded, strong, working man. By stressing the Miller's physical attributes, Chaucer suggests to the reader the idea of a down-to-earth man who takes pleasure in satisfying basic appetites. Though the Miller is a man of down-to-earth outlook and physical pleasure, he is a very intelligent man. His narrative style, if less complex and conventionally sophisticated than the Knight's, is superb in its realism, economy and control, especially of the humorous elements. The Miller is an educated man, and able to describe the paraphernalia of Nicholas's astrological activities. This rather unexpected subtlety is indicated in the final lines of the description in the General Prologue. These are introduced by "And yet..." sh...

Meiosis Modeling Activity Essay

Background Information Meiosis is the process by which eukaryotic organisms produce egg and sperm having half the genetic information (haploid) of the other cells in the organism’s body (diploid). You will notice some similarities to mitosis but some definite differences in meiosis that result in genetic diversity in the gametes as well as the offspring formed by the eventual fusion of the egg and sperm. Two of the most noted differences in meiosis are that 1) there are two complete divisions resulting in four daughter cells and, 2) meiosis has crossing over, an even that occurs in Prophase I that increases genetic variation in the gametes. Crossing over occurs between homologous chromosomes. These are the pairs of chromosomes in an organisms body that carry genes for the same trait located at identical positions on the two chromosomes. Even though they carry the same gene they may, however, possess different alleles for the gene which result in different forms of the trait. Pre-Lab: 1. Draw a tetrad in the space below and label the following: centromeres, sister chromatids, homologous chromosomes. 2. What are the two elements of meiosis that add variation to our population? (Hint: one occurs in prophase I and the other in metaphase I). 3. Which of the chromosomes #2-5 could be homologous with chromosome #1? Explain your answer. I think number 5 because it is the exact same as 1. Lab: 1. First view the recording on my message board under â€Å"Supplemental Learning Materials† for this lab. You will need the â€Å"code words† from the recording for one of your conclusion questions. Link to recording: http://www.connectionslivelesson.com/p2fwrdno8yk/ 2. After you have viewed the recording, gather your required materials. You will need 4 forks, 4 knives, 4 spoons, 6 rubber bands, and some twine or string to use as cell membrane. If you can have two different types of flatware that would be best (for example: 2 forks, 2 knives, and 2 spoons that are different than the other set of 2 forks, 2 knives, and 2 spoons). 3. Your model cell consists of 6 chromosomes (3 homologous pairs). Use the string to form the cell membrane for your cell(s). Begin with two forks, two knives, and two spoons (one of each from each set) inside your string cell membrane as shown in the recording. Proceed through each of the steps of meiosis using your flatware â€Å"chromosomes.† Use the textbook pages 324-325 for help. Phase Modeling Interphase Replicate the DNA of your chromosomes by adding a second fork, knife, or spoon to each existing fork, knife, and spoon. Hold each pair of â€Å"chromatids† together with a rubber band (centromere). Prophase I Create tetrads (XX) by pairing homologous chromosomes (set them next to each other). Model crossing over as best you can given the model we are using. Metaphase I Line up your tetrads along the metaphase plate. Model independent assortment. Anaphase I Move the homologous chromosomes to opposite ends of the cell. Telophase I You should have three chromosomes, knife, fork, and spoon, (each composed of two chromatids) in each of your two nuclei. Cytokinesis I Divide your cell membrane so that you have two daughter cells (two string circles for cells). Prophase II Check to make sure that each of your two cells contains three chromosomes made up of sister chromatids. Metaphase II Line your chromosomes up along the middle of each of your cells. Anaphase II Separate your sister chromatids (remove rubber band holding them together). Move one sister chromatid from each chromosome to opposite sides of your cell. Telophase II You should now have four nuclei, with three single chromosomes in each of the  cells. Cytokinesis II Divide your cell membranes so that you have four daughter cells (use more string). Data: Take 3 photos or create 3 drawings of your model as it looked in 3 different stages of meiosis as described in the table above. Indicate which stage of meiosis is shown in each photo/drawing. Include the photos or a scan of the sketches when you upload your lab to the drop box. Conclusion (6 points) 1. List the two code words that were given in the lab recording found on my message board. Chromosomes and fertilization 2. Does mitosis more closely resemble meiosis I or meiosis II? Explain your answer. More like Meiosis I because it only made two cells. 3. What is crossing over? When does it occur during meiosis? Why did you have difficulty modeling this element of meiosis using your â€Å"chromosomes?† Crossing over is the process in which homologous chromosomes exchange portions of their chromatids during meiosis. It occurs during prophase I. I had a hard time because you can’t really change the chromosomes so it was difficult to show. 4. Think about your modeling. Visually, what is the major difference between the separation of chromosomes between anaphase I and anaphase II There were four to separate then just two. 5. What is independent assortment? When does it occur during meiosis? How did you model this element of meiosis? 6. Which part of meiosis, meiosis I or meiosis II, is responsible for reducing the chromosome number by half in the cell? MEIOSIS II

Madoff Scandal

Contents Introduction2 Early Career2 The Firm3 Sales Strategy4 Investment Strategy5 The Scandal7 He was not alone9 The Markopolos Whistle11 The collapse13 Charges and Sentence13 The Victims14 2009 Ponzi Schemes16 The SEC Failure17 SEC post- Madoff19 Hedge Fund Transparency20 Conclusion21 Bibliography25 Tables Table 1: List of Madoff Clients (taken from the â€Å"The New York Times†, last updated June 24, 2009)15 Table 2: 2009 Ponzi Scheme SEC Charges17 Figures Figure 1 Fairfield Sentry vs Gateway6 Figure 2 Madoff Investor Funds (taken from http://orgnet. com/madoff. html)7 Introduction Operating from central Manhattan, Bernie Madoff developed the first and biggest global Ponzi scheme, an event of greed and dishonesty that lasted for more than 20 years, in which $65 billion dollars vanished from the pockets of some of the world’s richest people, charities and ordinary investors alike. This scheme lasted longer than any other white collar crime in history and along the way ruined countless individuals and organizations. The Madoff Ponzi scheme has changed the rules of trust that governed the money game. † Unlike other similar schemes, Madoff’s Ponzi scheme also scammed wealthy and investment savvy individuals that Madoff associated with. Bernard Madoff is a former financier, American hedge-fund investment manager, chairman of the NASDAQ (National Association of Securities Dealers Automated Quotations) stock exchange, and chairman of the firm Bernard L. Madoff Investment Securities LLC. He is the main conspirator of the history’s largest investor fraud committed by a single person. As a result of his act, Madoff was sentenced on June 29th, 2009 to 150 years in prison for crimes that the judge called â€Å"extraordinarily evil†3 and imposed a sentence that was three times as long as the federal probation office suggested and more than 10 times as long as defense lawyers had requested. Early Career Bernard Lawrence Madoff was born in New York City on April 29, 1938 and grew up in a predominantly Jewish neighborhood. He earned a degree in political science from New York’s Hofstra University in 1960 and founded the Wall Street firm Bernard L. Madoff Investment Securities LLC the same year. 1 He was a pillar of finance and charity. As an outstanding philanthropist he served on boards of nonprofit organizations around the world such as businesses, charities and foundations, many of which were entrusted by his endowments. The firm started as a penny stock trader with $5,000 dollars he saved from working as a sprinkler system seller and lifeguard. In the beginning the firm started trading common stock over the counter (OTC) through the National Quotation Bureau using Pink sheets. It later challenged the New York Stock Exchange (NYSE) old brokers by using powerful marketing techniques to win clients and promoting electronic trading using innovative computer information technology. His firm grew with help from people around him such as his father-in-law, who referred him to friends and family. Madoff helped created NYSE rival, NASDAQ, where he later became the chairman. The Firm Bernard L. Madoff Investment Securities LLC functioned as a securities broker and/or dealer in The United States and internationally. Headquartered in New York City, it provided executions for dealers, brokers and financial institutions. The firm had been one of the top market makers on Wall Street with Madoff as the principal face. In plain terms, a market maker is an institution (brokerage company or bank) that is ready to execute stock trades (buying and selling) at every second of the trading day and charges a small fee for every trade via the use of a spread in the ask or bid price. It functioned as a third-maker provider by directly implementing commands from retail brokers. At one point, Madoff Securities was the largest market maker at the NASDAQ and in 2008 was the sixth largest market maker on Wall Street. Sales Strategy Around the 1970s, Madoff began administrating money for investors, some on them he knew personally and several others who belonged to clubs he was member of. He attracted billions of dollars and several large hedge funds also invested in the firm because he did not charge usual fees and only collected fees for processing trades. Madoff offered modest and steady returns to exclusive clients instead of offering high returns to all clients, giving the appearance of his firm to be exclusive. The firm’s annual returns were abnormally consistent, a key factor in achieving the fraud. Most business men believed the story that a single person could generate returns of 12 to 13 percent a year trading the stock market no matter what happens without a single down quarter. 7 Some of these people applied for membership to the clubs that Madoff was a member of, in order to meet and be accepted by him. In addition, he never hustled anyone for investing with him; instead he let them come to him. Thus, he created this aura of exclusivity around him and everyone wanted to be a part of his club. One of the groups targeted by Madoff was the â€Å"Jewish circuit. Being Jewish, Madoff attracted many wealthy Jewish people he met at country clubs on Long Island and Palm Beach. This was an Affinity Ponzi Scheme, as it was called by Newsweek article. 7 Affinity fraud includes investment frauds that prey upon members of identifiable groups, such as religious or ethnic communities, language minorities, and the elderly or professional groups. Around 1995, some of the most prominent Jewish individuals in finance and industry began to invest with Madoff. 1 His most effective recruiter, Jacob Ezra Merkin, was president of the Fifth Avenue Synagogue, member of Yeshiva University, Carnegie Hall and other nonprofit organizations. Mr. Merkin started the investment firm named Gabriel Capital Group. Embraced by philanthropies and installed in a superior position of trust, Merkin seemed to be a Wall Street wise and trusted person to manage other peoples’ money. 1 Investment Strategy His investment strategy consisted of purchasing blue-chip stock, from well established companies like Coca Cola, Intel and General Electric, having stable earnings and no extensive liabilities, and taking option contracts on them. 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. † When done correctly, this strategy creates boundaries in the stock and protects them against a quick decline in the share price. The investment strat egy used in Madoff’s feeder fund, Fairfield Sentry, is called the split-strike conversion strategy and involves a combination of stocks and options. In plain terms, Madoff bought 40-50 stocks from the S&P 100 index. He then bought put options on the index at strike prices below the market's current level and sold call options above the index's current price. It is similar to using collars, an options strategy that limits losses along with the gains for a particular stock. The following chart outlines the returns of the Madoff feeder fund against Gateway, a fund running the same split strike strategy. A feeder fund is a fund that conducts virtually all of its investing through another fund. Madoff used such feeder funds to mask the fact that he’s acting like a hedge fund in order to avoid SEC investigation. Figure 1 Fairfield Sentry vs. Gateway After the stock market crash of 2001, Gateway follows a downward path for a period of almost 3 years, before it starts to gain positive traction that will last until mid 2007, just in time for the mortgage meltdown that ignited one of the worst recessions in history. Interestingly enough, Madoff’s returns shows no signs of volatility and continue to gain positive traction with only minor fluctuations. Apparently he worked with multiple feeders and the network of individuals and funds were set up to pass money to him. Most of the investors did not know that all of their money was going to the same place: Madoff’s firm. The next diagram depicts the depth and interconnections of Madoff’s funds. The directions of the arrows represent the direction of the money flow. Figure 2 Madoff Investor Funds The Scandal The investment scandal was unveiled with Madoff’s confession. He reportedly confessed to his two sons during the first week of December 2008 that his business was â€Å"giant Ponzi scheme. † Madoff sons, Mark and Andrew, turned him in to U. S authorities on the day after his confession. On December 11, 2008 he was arrested and charged with securities fraud; also known as stock fraud and investment fraud, securities fraud covers a wide range of illegal activities, all of which involve the deception of investors or the manipulation of financial markets. He said to the agents that there was no innocent explanation to the fraud that cost clients $65 billion dollars. He traded and lost money and paid investors with money that was not there. How did Bernard Madoff set the most audacious fraud in history? Madoff said that had absolutely nothing, everything was just a big lie and it was essentially a giant Ponzi scheme. No one ever questioned the investment strategy and resources of the firm. No verification of the accounting was ever made. 7 A Ponzi scheme is a type of illegal pyramid scheme. It is named after Charles Ponzi who became infamous throughout the United States for using the technique in the early 1920s. The Ponzi scheme operation pays returns to investors from their own money or from money paid by new investors, rather than from actual return earned. This type of schemes attracts many investors because it offers high and consistent returns that other investments cannot provide. Eventually the system is destined to collapse under its own weight because earnings are usually less than the payments. â€Å"The business had been insolvent for many years. † Madoff was lying to his clients when he said he was investing their money and generating stable returns. 3 The money of new clients was used to pay clients who wanted to cash out. Some may still ask the question of why he started the scheme in the first place. A possible explanation of his actions could be that he incurred some trading losses and in order to recoup them quickly, put a quick plan together where he would shuffle money between new and old accounts. Initially he may have had the intention of paying all the investors back, but since his real investing strategy did not work fast enough, he stuck to the scheme. His initial intentions were probably not to carry on indefinitely to its present point. However, once his real trading strategies were not producing enough returns to cover his advertised returns (when the market was performing well), he continued until he lost control. If the economy were not in a recession, he would most likely keep going. The only reason he gave up is because investors started withdrawing money and he could not cover the upcoming withdrawals. If the economy kept going strong, Madoff would have been able to attract new money and continue living his double life as usual. He was not alone Few people knew that Bernard Madoff had a highly structured second life for more than 20 years. Bernard Madoff confession and the afterward fraud scandal triggered the investigation to uncover Madoff’s mysteries. He initially claimed that he committed the crimes all by himself, but because it extended trough decades and continents â€Å"a fog of suspicion immediately engulfed Madoff family members who worked at the firm, as well as employees and business associates. There were some small clues on how he pulled off the massive fraud, for instance, the 1980s server that Madoff refused to replace even though some data had to be typed by hand. When government investigated the machine it discovered that it was the heart of the fraud. The statements printed out from this old IBM machine showed trades that were never made. 15 First, the in vestigators turned to the accounting department. Madoff’s accountant David Friehling was also charged with securities fraud, investment adviser fraud and false filings made to the SEC. Unlike any other professional who protects the interests of his clients, accountants have the commitment to protect the public by ensuring accurate financial reporting. â€Å"They are the first line of defense against fraud. † Friehling’s duty at the investment firm was to ensure clients’ securities and money were they when they wanted to withdraw it. In addition, the SEC filed a civil enforcement action against him alleging that he did not perform his duties as an auditor. David Friehling was the auditor and the bookkeeper, which means that he audited his own work. It’s no great surprise that he found nothing wrong with any of his own work. †18 Next, they turned attention to the person second in command at Madoff’s firm. Frank DiPascali was Madoff’s right hand man for 33 years and his unofficial title was director or of options trading and chief financial officer. Nobody was sure what he did or what his official title was, but everyone knew he was a big deal. DiPascali rose to the position of CFO despite his lack of education and financial experience industry. On August 11, 2009, he pled guilty to ten counts of fraud related to the Madoff investment scandal and he is currently trying to negotiate his sentence (to be set on May 2010) in exchange of information of additional people involved in the scheme. Madoff trusted DiPascali completely to keep the secret of the scam operations. DiPascali manipulated fake returns on some key investors and if one of these clients had large gains, he would fabricate a loss to reduce the tax bill. 15 This means, if true, that these investors knew their returns were suspicious. JP Morgan Chase was the primary bank Madoff used to make his Ponzi deposits. According to one estimate, his deposits totaled $5. 5 billion sometime in 2008, and the after-tax profits grew to $483 million over a period of sixteen years. The bank withdrew a total of $250 million in the summer of 2009, due to suspicions arising from due diligence in Madoff’s investment-advisory business. According to a pending lawsuit against the bank: â€Å"Upon acquiring this knowledge, Chase entered into a conspiracy with Madoff and BMIS in violation of the federal Racketeer Influenced and Corrupt Organizations Act (â€Å"RICO†), 18 U. S. C.  § 1961 et seq. 19Depending on the outcome of the lawsuit, along with many more to come, JP Morgan Chase may have to shell out hundreds of millions of dollars in settlement. Madoff’s family was also the center of attention to find clues of Bernard Madoff’s fraud, although none of them have been charged or accused so far. During the plea hearing Madoff took all the responsibility of the fraud most likely to c over up his family. Peter Madoff, Bernard Madoff’s brother, was the chief compliance officer of the firm. He was in charge of ensuring adequate internal control and that the client funds and securities were properly protected. Even though Madoff sons, Mark and Andrew, did not have any position with the investments firm, they were involved in other areas within the firm. They are the ones that turned Madoff in. The family must have known about the long running scheme and should be indirectly responsible for some of the investor losses incurred, as the scheme had supported their lavish lifestyles. Irving Picard, the court appointed trustee in charge of liquidating Madoff’s firm, sued some of the Madoff family members (two sons, brother, niece) for $198. 7 million seeking defrauded investor damages. The Markopolos Whistle Bernard L. Madoff Investment Securities LLC firm was inspected at least 8 times and he was personally interviewed twice in a period of 16 years by the SEC and other regulators before being uncovered. For years, he avoided regular reviews by saying that he was managing accounts for hedge funds instead of running an investment advisory business. During the years of 1999 and 2000 the SEC was worried that the firm was violating a trading rule and sent examiners to investigate but in response Madoff summarized new procedures to deal with the findings. 12 In 2001 some outsiders were becoming suspicious of Madoff’s firm activities. Harry Markopolos, Barron’s, a Dow Jones & Co. publication and Marhegdge, a hedge fund trade publication, raised concerns about Madoff’s steady returns. 12 In 2005 Mr. Markopolos met with SEC investigators in New York and prepared a 21-page report entitled â€Å"The World’s Largest Hedge Fund is a Fraud† summarizing his concerns. The memo specified 29 red flags and in part concluded that â€Å"Bernie Madoff is running the world’s largest unregistered hedge fund† and â€Å"†¦yet since Bernie Madoff is not registered as a hedge fund but acting as one via third party shields, the chances of Madoff escaping SEC scrutiny are very high. 12 The SEC examined Madoff and did not find any violations. He failed for 8 years to get SEC to step in until the scam collapsed and prompted Madoff to confess. In his report, Markopolos clearly outlines some pretty obvious (by now) facts that the regulatory authorities omitted. Here is a short summary of some points that stood out: †¢If the Madoff returns are legitimate, they’re due to insider trading (unlikely scenario). If they’re illegitimate, they’re due to the setup being a Ponzi scheme (likely scenario). †¢The secrecy around the fund’s assets doesn’t make sense as a typical hedge fund would brag about such returns. The secrecy is probably due to the fact that Madoff doesn’t want the regulatory authorities to know he exists as a secret hedge fund. †¢Since Madoff is a broker-dealer, he can generate any trade tickets he wants, therefore generate false information. †¢The Madoff family has held important leadership positions in NASD, NASDAQ ® and other prominent industry bodies that would not be inclined to lead an investigation. †¢Out of 174 months, only 7 months (4%) saw negative returns in Madoff’s Fairfield Sentry fund. No MLB hitter bats . 60, no NFL team has ever had a 96-4 record out of 100 games, and no money manager is up 96% of the months. †¢Since Madoff is not registered as a hedge fund but acting as one via third party shields, his chances of escaping SEC investigations have remained high. The collapse The final weeks of the biggest scheme in history began on December 2008 when the market continued to fall. Madoff struggled to keep the scheme afloat wh en investors tried to withdraw $7 billion from the firm. In typical Ponzi scheme fashion, Madoff desperately needed money from new investors to pay off existing investors. Ten days before his arrest, he received $250 million dollars from Carl Shapiro, a 95 year old philanthropist and entrepreneur, and one of Madoff oldest friends. Mr. Shapiro helped Madoff launch his investing career by giving him money to invest in 1960. He also asked others to invest including Wall Street financier Kenneth Langone. Madoff said he was raising money, between $500 million and $1 billion, for a new investment vehicle for exclusive clients. Mr. Langone declined to invest. 13 Mr. Langone’s denial could have been based on quantitative analysis that most of Madoff’s investors failed to undertake. In addition, by the time Madoff proposed the new investment vehicle to Mr. Langone, rumors of his questionable returns had increased considerably. Charges and Sentence â€Å"On March 10, 2009, a Criminal Information was filed in Manhattan federal court charging Bernard L. Madoff with eleven felony charges including securities fraud, investment adviser fraud, mail fraud, wire fraud, three counts of money laundering, false statements, perjury, false filings with the United States Securities and Exchange Commission (â€Å"SEC†), and theft from an employee benefit plan. † The case is United States v. Bernard L. Madoff, 09 Cr. 213 (DC). The criminal information or complaint declared that Madoff had defrauded his clients for $65 billion. On March 12, 2009 he pleaded guilty to all eleven counts and on June 29, 2009 he was sentenced to 150 years of imprisonment at the Metropolitan Correctional Center in New York (he was later moved to a prison in Butner, North Carolina) and $170 billion in restitution. A breakdown of his sentencing is given below:19 †¢40 years for two counts of international money laundering †¢20 years for securities fraud †¢20 years for mail fraud 20 years for wire fraud †¢20 years for false filing with the S. E. C. †¢10 years for money laundering †¢5 years for investment adviser fraud †¢5 years for false statements †¢5 years for perjury †¢5 years for theft from an employee benefit plan The Victims Some of Madoff’s clients included hedge funds, banks, charities, universities, astute financiers, hospitals, film prod ucers and many others. According to the latest Trustee Interim Report assigned for fund recovery, as of June 30, 2009 the recovery of funds from Bernard Madoff has been $1,088,507,818 with an additional $13. billion in incoming recovery requests. A short list of the investors with the largest losses follows: CLIENTTYPE OF CLIENTEXPOSURE Fairfield Greenwich Group Financial Firm$7. 5 Billion Kingate ManagementFinancial Firm$3. 5 Billion Tremont Group HoldingsFinancial Firm$3. 3 Billion Banco SantanderFinancial Firm$3. 1 Billion of client exposure Bank MediciFinancial Firm$2. 1 Billion Ascot Partners, run by Jacob Ezra Merkin, GMAC’s chairmanFinancial FirmMost of the firm's $1. 8 billion in assets Access International AdvisorsFinancial firm$1. 4 billion Fortis Bank NetherlandsFinancial firm$1. billion Union Bancaire PriveeFinancial firmunder $1. 08 billion HSBC HoldingsFinancial firm$1 billion Picower FoundationCharity$958 million Carl ShapiroIndividual$545 million Carl & Ruth S hapiro Family FoundationCharity$145 million Yeshiva UniversityCharity$100 to $125 million Hadassah, the Women's Zionist Organization of AmericaCharity$90 million Korea Life InsuranceInsurer$50 million Fairfield, Conn. pension fundPension fund$42 million Madoff Family FoundationCharity$19 million Jewish Community Foundation of Los AngelesCharity$18 million Alicia KoplowitzIndividual$14 million Table 1: List of Madoff Clients (taken from the â€Å"The New York Times†, last updated June 24, 2009) As if the loss of fortunes were not tragic enough, there were also 2 suicides that stemmed from the scandal. Rene-Thierry Magon de la Villehuchet, 65, who lost more than $1 billion of his own and his investors’ money, took his own life on December 23, 2008 after realizing that he would not be able to recoup his investment. The Magon de la Villehuchet family was one of the most prominent families in France, building its fortune in the shipping industry during the 17th century. William Foxton, 65, was the second suicide victim of the scandal, but unlike the first victim, he had never heard of Madoff and lost his investment through one of Madoff’s feeder funds. 2009 Ponzi Schemes The now infamous Ponzi scheme may have been popularized by Bernie Madoff during the present year, but the SEC has been uncovering such schemes at a rapid pace since the Madoff scandal. The following is a list of all the Ponzi schemes charges the SEC has issued in 2009 so far: DATEDEFENDANTSPONZI AMOUNT (In millions) 1/08/09Joseph Forte, Joseph Forte LP$50 1/15/09James G. Osie, CRE Capital$25 /19/09Robert Allen Standford$8,000 2/19/09Marvin Cooper, BCI Inc$4. 4 3/11/09Anthony Vassalo, Kenneth Kenitzer$40 3/26/09Millenium Bank$68 4/01/09Edward T. Stein$55 4/06/09Weizhen Tang$50-75 4/08/09Shawn Merriman$17-20 4/09/09Robert P. Copeland$35 4/13/09Clelia Flores, MRI Inc$23 6/09/09Peter Son, Jin Chung$80 6/10/09Gregory Bell & Lancelot Mgmt$2,000 6/15/09David J. Hernandez$11 6/24/09M ichael C. Regan, Regan & Co$15. 9 6/24/09Moises Pacheco, AMM, BD&C$14. 7 6/28/09John Bravata, Richard Trabulsy$50 9/08/09Philip Barry, Leverage Group$40 9/28/09Frank Bluestein$250 10/16/09Homepals14. 3 Table 2: 2009 Ponzi Scheme SEC Charges According to the SEC website, 2008 SEC Ponzi charges totaled $470 million (excluding Madoff charged on December 11), compared to 2009’s approximate amount of $11 billion YTD. The earliest Ponzi scheme on SEC recent records dating back to 1997 is reported on July 4, 2001 for $67. 5 million. There is no mention of another such scheme until June 9, 2005 for $6 million, while the next such scheme is reported on July 24, 2007 for $41. 9 million. The SEC Failure Bernie Madoff was so above suspicion that he even got his name informally applied an SEC rule. The â€Å"Madoff exception† allowed market makers such as Mr. Madoff to sell stock short to facilitate a customer buy order, even if the stock in question was ticking downward. Under a rule that was in place until 2007, short sales on a downward-ticking stock were normally prohibited. In a short sale, investors borrow stock and sell it, hoping to repay with shares bought at a lower price. Madoff was frequently and unsuccessfully investigated by the SEC. His firm’s first contact with the SEC was in the early 90’s when he hired two accountants, Frank Avellino and Michael Bienes, for his first small investment advisory business. The accountants helped him recruit more than 3,000 clients. They were violating the law selling unregistered securities; however they were not accused of securities fraud. The SEC shut down the Avellino & Bienes operation and forced Madoff to return more than $400 million to investors. 13 In 2000, the SEC Boston office is contacted by Markopoulos where he outlines his first concerns about Madoff. Unable to persuade an investigation, Markopoulos is told to contact the SEC New York office. 13 However, no further investigation is conducted partly because the information presented to the SEC is not understood by its investigators due to its highly complex nature. Since then many other letters from concerned outsiders are being sent to the SEC about Madoff. No action is taken from the SEC until January 2006 when it launches an investigation prompted by the Markopolos memo. After an interview with Madoff in May 2006 in its case-closing recommendation, the SEC said it â€Å"found no evidence of fraud. †13 After the uncovering of the investment fraud, the SEC conducted an internal investigation entitled â€Å"Investigation of Failure of the SEC to Uncover Bernard Madoff’s Ponzi scheme. A 477-page report was released in September 2009 were the SEC Office of Inspector General (OIG) analyzes the SEC failure to uncover Madoff’s Ponzi scheme, how it missed all the red flags and identifies recurring opportunities to find the fraud and how unsuccessful their efforts were. In a recent PBS interview with Henry Pitt, former SEC commissioner from 2001-2003, Mr. Pitt indirectly pointed out some SEC flaws:31 †¢The SEC’s exami nation program was put in place in the mid 90’s is fatally imperfect. The total staff of the SEC is 3,500 people (not all of them do examinations) and there are 11,000 registered investment advisers subject to the SEC’s jurisdiction. There will never be enough money, enough people and enough sophistication to conduct examinations the way they needed to be conducted. †¢The law for broker-dealers was setup in 1934 and in 1940 for investment advisers. The relationship between the two entities is treated separately. In today’s marketplace, this viewpoint needs to change. This is one of the reasons why Madoff continued to be in business after the Avellino and Bienes scandal. The SEC was heavily focused on legal analysis, while not paying too much attention to economic and financial analysis. †¢There needs to be more hedge fund transparency, something the SEC has failed to convince the courts to do so up to now. Arthur Levitt Jr, former SEC chairman from 1993-2001, maintains a view that supports a more focused approach on risk-assessm ent within the SEC. Mr. Levitt has been drawing criticism lately regarding his personal and business relationships with Madoff. When asked about SEC resources, he raises a valid point: â€Å"Since 2002, the number of investment advisers — such as Madoff Securities — has increased by 50%. Yet enforcement resources have been flat or even reduced. The number of SEC enforcement division personnel was cut by 146, to 1,192 in 2007 from 1,338 in 2005. †37 SEC post- Madoff Since the Madoff scandal, the SEC has been taking significant steps to reduce the probability that such frauds will occur in the future. A summary of the post-Madoff Reforms are included on the following list: †¢Safeguarding Investors’ Assets †¢Revitalizing the Enforcement Division †¢Revamping the Handling of Complaint and Tips †¢Advocating for a Whistleblower Program †¢Conducting Risk-Based Examinations of Financial Firms Increasing Focus on Agency-Wide Risk Assessment †¢Improving Fraud Detection Techniques for Examiners †¢Recruiting Staff with Specialized Experience †¢Expanding and Targeting Training †¢Seeking more Resources †¢Integrating Broker-Dealer and Investment Adviser †¢Enhancing Licensing, Education and Oversight Regime for †Å"Back-Office† Personnel In summary, the changes focus where the SEC had previously failed: enhancing investigator financial education, providing incentives for whistleblower tips, allocating additional resources. Hedge Fund Transparency One of the SEC’s attempts towards hedge fund transparency came in 2003 where the entity unsuccessfully tried to enforce the registration of a majority of hedge fund managers by re-interpreting the definition of ‘client’ to an investment-adviser. This rule would have required hedge funds to register as investment advisers. This attempt was dismissed by the U. S. Court of Appeals for the District of Columbia on June 23, 2006. The hedge fund industry as a whole is against regulation in part because such regulations would reveal the trading strategies employed internally to the competition. This is a viable argument in favor of the hedge fund industry, however not viable enough to prevent further regulation, at least in the US markets. A possible suggestion could be to create a quasi-government committee made up of various former heads of finance-related industries that are given the power to review and approve hedge funds. The information they have on their hands is solely between them and certain high level members of the SEC, with secrecy comparable to that of the likes of the Department of Defense. In this way, hedge funds avoid public disclosure of their strategies, while the SEC accomplishes the regulation they have always been pursuing. There could be different levels of approval according to the market value of a hedge fund. While this suggestion may not be the most viable, it is serves an option for both the SEC and hedge fund managers. Conclusion Given its impact on the financial world, it would seem that this scandal could have been prevented much earlier. Why did FINRA (Financial Industry Regulatory Authority), SIFMA (Securities Industry and Financial Markets Association), SEC, and other regulatory bodies not act quicker? Below follows a list of possible concluding points for such long inaction. The world to which the securities laws apply — laws now 70 and 75 years old — is light years away from the world we have today. †34 Point 1: Bernie Madoff was a legend on Wall Street. He and his family were among the elite of the Street and, due to his long career and connections, he obtained a God-like status on the Street and as someon e who could do no wrong. As any religious individual, they do not question God’s actions, they just believe. Furthermore, individuals who commit fraud usually do not have Madoff’s impressive background, connections and reputation. Madoff used his status on the Street as an advantage to raise more money and fly under the radar for as long as he did. A scheme is the last thing one would expect from someone whose resume includes a time as former chairman of NASDAQ. In addition, Harry Markopolos admits that he did not contact FINRA due to his family’s connections with the regulatory authority. In particular, Andrew Madoff served as an incoming District 10 member of FINRA in 2003 while his brother Mark served on FINRA’s Mutual Fund Task Force in 2004. Also, Bernie Madoff’s brother Peter served on the board of directors of SIFMA. Point 2: Madoff was not using any illegal trading strategies. The split-strike option is a legitimate strategy that has been employed for years by a few experienced industry professionals, such as Harry Markopolos. It is a highly complex strategy that even Markopolos in his SEC paper admits that few really understand, hence many of Madoff’s experienced investors failed to quantitatively analyze, yet they rather based their assumptions on word of mouth. In the same token, the SEC did not pay attention to something that they could not completely understand and did not put as much emphasis as they should have. Point 3: Red flags were not raised initially due to the overall economy’s performance. When the market was performing well, a 12% return was within reasonable lines of S&P returns. Some flags came up when the market started producing negative returns, yet Madoff’s returns kept their usual steady, profitable path. If the market were still performing neutral to slightly above neutral levels, chances are that the scandal would still lie beneath fake returns. Point 4: The SEC did not act any sooner possibly due to the psychological structure of its own investigators. A typical SEC investigator is young, non-aggressive, and lacks enough resources to fully take on such a case single-handedly. The aggressive and talented individuals get absorbed by Wall Street due to obvious lucrative reasons. This is not to say that the SEC does not employ talented, aggressive individuals; all that is being conveyed here is that probably some of the investigators’ psychological and character structure coupled with the lack of resources was a key mixture of ingredients the organization was missing. Plus, in order to raise such a high stakes complaint an SEC investigator would have to go through the usual bureaucratic red tape inherent in government process. Point 5: The SEC is made up of lawyers, thus lack the experience and knowledge of financial markets. The institution is not a financial entity that relies on satisfying shareholder returns; it is a regulatory authority that interprets and applies the law. Lawyers are not fund managers, thus are not familiar with the complexities and headaches that come with such territory. Point 6: The SEC failure in the Madoff case is yet another example of a ‘failure’ of the invisible hand to regulate capitalism’s promotion of self-interests. While de-regulation of capital markets was very instrumental to transform the US economy into a global powerhouse, lack of de-regulation brought upon the Madoff scandal along with one of the worst recessions in US history. If the markets were more heavily regulated from the beginning, one can only speculate on how far the US economy could have reached. In his testimony to Congress, Allan Greenspan admitted that his ideology of free market capitalism has a major flaw: â€Å"I made a mistake in presuming that the self-interest of organizations, specifically banks, is such that they were best capable of protecting shareholders and equity in the firms. † In short, Greenspan’s flaw was a variable he never considered as part of his ideology of free market capitalism: human greed. Not surprisingly, Greenspan’s flaw has influenced many areas of free markets from credit-default swaps and mortgage lending tactics, to unregistered hedge fund management practices. Bernard Madoff has left his imprint on Wall Street's ‘disgraced' list and his case will be used as an example to further regulate hedge funds and transparency needed in the financial industry. His life story of rising to the top and falling from grace highlights the double-edged sword of capitalism's laissez faire attitude. It will be very interesting to see how effectively the regulatory authorities will tackle this issue, as Madoff's case moves from the public eye to university case study in the coming years. Bibliography