ACC 562 Advanced Auditing
Bernard Lawrence Madoff
Bernard “Bernie” Lawrence Madoff was born in New York City and grew up in a lower middle-class neighborhood. He started college at the University of Alabama and soon transferred back to New York to Hofstra College, located on Long Island. Bernie had always wanted to be wealthy and that was his life-long dream. He had spent many of his teenage days visiting Wall Street. Once he graduated from college with his political science degree, Bernie starting his own company, Bernard L. Madoff Investment Securities LLC. (Rittenberg, Johnston, Gramling, & Knapp, 2012)
Madoff’s firm began trading in small securities which were commonly called penny stocks. He wanted to get involved with the larger stocks, but because of the rules and anti-competitiveness of the NYSE, it was hard for small brokerage firms to get in the doors as the NYSE. Bernie knew that to get smaller firms a chance, computer based trading would have to become a reality. In 1971, NASDAQ was founded and was destined to become the “world’s largest electronic stock exchange and the largest global stock exchange in terms of trading volume.” (Rittenberg et al., 2012, p. 126) Bernie Madoff is credited with being one of the founding fathers of the NASDAQ. He also served as a chairman for three one-year terms.
During this time, Bernie Madoff continued his private investment firm and it continued to grow. By the end of the twentieth century, the annual profits were in the tens of millions of dollars. One of the keys to the massive growth of the business was the amounts of money that was entrusted to Madoff by his clients and the rates of return that were earned by the firm annually. It was not unusual for the firm to see an average return between ten and fifteen percent, however, what was impressive was that the rates were consistent from year to year, even in periods of market declines....