Case study


Case study


What should be done to ensure that Ponzi schemes like this one does not happen in the future

The people investing in any person or organization should at all times consider having an evaluation of what they are investing in. This means that the investors like those that invested in Madoff should have at first been able to identify and get information concerning the company they were investing in. in addition, they would also have considered the terms and conditions with which Madoff operated his business. As one of the clients said, they got their returns but did not question the reasons as to why Madoff did not post his records concerning the business operations online. This means that Madoff was acting secretly and thus the clients who invested in him should have considered finding out the reasons as to why he acted privately and in secret instead of operating like all the other businessmen.

In managing the finances, the investigators should ensure that all the people employed in companies like that of Madoff were educated and has skills which would allow them understand what kind of business they are carrying out. The advantages of having educated people in a business is to enhance the performance of a business, and this can be an important decision that investigators should consider to ensure that all financial institutions are equipped with learned persons who have the necessary skills to ensure that they provide support and deal with complex situations (Bradely, 2006: 43-44). In the case study, the people who worked at Bernard L. Madoff Investment Securities were uneducated and had no background experience in finance, and this made it possible for him to carry out his fraud business without having anyone to question him.

All businesses should be registered before they start their operations, and strict rules should be given to any individuals who are and will be willing to start businesses. The investors on the other hand should ensure that they deal with registered businesses to avoid having issues that like those that Madoff clients experienced. The investigators should also be carrying out their duties regularly to ensure that all businesses are registered. Registration of a business gives a company or any business the representation and certification of carrying out businesses which are at the same recognized by the government as well (Amtower, 2011: 50).It is evident that Madoff company was not registered until the year 2006, meaning that the investigators were not carrying out their duties effectively, because if they would have done their work, they would have realized that the company had not been registered years back. This also means that in case a business starts operating without being registered, the manager and the investors should be answerable to the law.

In future, the investors should also consider having a different way in which they invest their resources. Most of Madoff’s clients had invested all into Madoff’s company, and after the realization that the business was a fraud; they experienced lots of losses which they would not have if they had diversified their investments instead of investing in Madoff only.


Amtower, M. (2011). Selling to the government: What it takes to compete and Win in the World’s largest market. New Jersey: John Wiley and Sons Inc pg 50

Bradely, G. (2006). Benefit Realization Management: A Practical Guide to Achieving Benefits through Change. Britain: Gower Publishing Ltd. Pg 44-45


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