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Liabilities – approx 65 billion dollars

Sentenced to – 150 yrs imprisonment

- With restitution of 17billion dollars

Much of our contemporary understanding of preventative measures of fraud centre around the Fraud
Triangle in which the three must-have elements of fraud engagement are incentives, opportunities and
rationalisations. This idea was first put forward in an article by Donald R. Cressey and Edwin Sutherland
in November 1951 titled, “Why Do Trusted Persons Commit Fraud? A Social-Psychological Study of
Defalcators”. However, it was Steve Albrecht who first started calling the three elements a “Fraud
Triangle” (Albrecht, 2014). The Fraud Triangle describes three factors that are present in every situation
of fraud. By using the Fraud Triangle this study will answer the questions: How did Madoff manage to
conduct a huge fraud scheme for so many decades without being questioned by any of the investors?
And what role did auditors play in Bernard Madoff’s scandal?

He was a former
chairman of the NASDAQ and sat on several industry association boards and he had
family members who occupied key positions in the company. He even donated to
charities and politicians. Investors were blinded by the resumé, his perceived wealth,
and his lofty status in the community and therefore did not feel the need to dig beneath
the surface when conducting due diligence. Furthermore, investors knew that if they
asked too many questions and angered him, he would tell them that he did not want
them as a client.
it appears that his motive was a combination of greed and pride. The greed grew from the Madoffs‘
desire to live an ultra-extravagant lifestyle and socialize with the wealthy elite. The pride came from
his inability to admit failure in his quest to provide investors with promised returns.
"Nasdaq" was initially an acronym for the National Association of Securities Dealers Automated

he Nasdaq Stock Market , also known simply as Nasdaq) is an American stock exchange. It is
the second-largest exchange in the world by market capitalization, behind only the New York Stock
Exchange located in the same city.[2] The exchange platform is owned by Nasdaq, Inc.,[3] which also
owns the Nasdaq Nordic (formerly known as OMX) and Nasdaq Baltic stock market network and
several U.S. stock and options exchanges.

The Dow Jones Industrial Average (DJIA), or simply the Dow (/ˈdaʊ/), is a stock market index that
shows how 30 large, publicly owned companies based in the United States have traded during a
standard trading session in the stock market.[3] The value of the Dow is not a weighted arithmetic
mean[4] and does not represent its component companies' market capitalization, but rather the sum
of the price of one share of stock for each component company. The sum is corrected by a factor
which changes whenever one of the component stocks has a stock split or stock dividend, so as to
generate a consistent value for the index.[5]
It is the second-oldest U.S. market index after the Dow Jones Transportation Average, created
by Wall Street Journal editor and Dow Jones & Companyco-founder Charles Dow. Currently owned
by S&P Dow Jones Indices, which is majority owned by S&P Global, it is the best known of the Dow
Averages, of which the first (non-industrial) was originally published on February 16, 1885. The
averages are named after Dow and one of his business associates, statistician Edward Jones. The
industrial average was first calculated on May 26, 189

Index Fund

What is an 'Index Fund'

An index fund is a type of mutual fund with a portfolio constructed to match or track the components of
a market index, such as the Standard & Poor's 500 Index (S&P 500). An index mutual fund is said to
provide broad market exposure, low operating expenses and low portfolio turnover. These funds adhere
to specific rules or standards (e.g. efficient tax management or reducing tracking errors) that stay in
place no matter the state of the markets.


"Indexing" is a passive form of fund management that has been successful in outperforming most
actively managed mutual funds. While the most popular index funds track the S&P 500, a number of
other indexes, including the Russell 2000 (small companies), the DJ Wilshire 5000 (total stock market),
the MSCI EAFE (foreign stocks in Europe, Australasia, Far East) and the Barclays Capital Aggregate Bond
Index (total bond market) are widely used for index funds.