Madoff's Ponzi Scandal

Investors sent stocks lower as anxiety over the growing list of firms affected by investment manager Bernard Madoff magnified Wall Street’s concerns about the health of the financial sector. Madoff stands accused of operating an elaborate Ponzi scheme, using cash from new investors to pay off older ones, to the tune of $50 billion. US authorities allege that Madoff delivered consistently strong returns to clients by secretly using the principal investment from new investors for payments to other investors in what is known as a "pyramid fraud." The alleged offenses only came to light because he could no longer raise the money to keep his scheme going, according to the US Securities & Exchange Commission.

The 70-year-old Madoff, well respected in the investment community after serving as chairman of the Nasdaq Stock Market, was arrested as he was suspected of leading a $50 billion Ponzi scheme.Global finance giants have admitted huge potential losses in the suspected pyramid fraud scam run by the Wall Street veteran. HSBC has potential exposure of about $1.5 billion, the Financial Times reported.The Spain's largest bank said its investment fund Optimal has a 2.33 billion euro exposure to Madoff Securities. France's largest listed bank ,BNP Paribas said it has a potential 350 million exposure. Santander, the eurozone's largest bank by market value, said its clients had an exposure of 2.33 billion euros to Madoff's investment funds. Nomura Holdings, Japan’s biggest brokerage, said it had a $303 million exposure related to Wall Street trader Bernard Madoff,

Madoff’s alleged fraud has apparently shook the world. More so because it is stated to the world’s biggest financial fraud till date. Shock waves from Bernard Madoff's alleged fraud spread globally, as charities, wealthy individuals and banks disclosed losses from the prominent Wall Street trader's investment management business.Madoff claimed that he had only 200 to 300 million dollars left, while prosecutors were uncertain how much money Madoff's clients, among them banks, prominent investors and celebrities, have lost.

Bernard L Madoff Investment Securities LLC, operated as an international market broker with a separate investment advisory business for private clients. The advisory business was kept secretive by Madoff and served between 11 and 25 clients with 17.1 billion dollars under his management. New York hedge fund manager and Wall Street legend Bernard Madoff has been charged with what could be the largest Ponzi scheme in history.