No One Would Listen: A True Financial Thriller [Paperback]

The last book that I read about Madoff was also the first, the Strobers' account rushed out only a month after the scandal broke publicly. Appendix B of that volume contained the 29 `red flags' that indicated to Harry Markopolos what Madoff was doing, and Appendix B of Harry's own book gives them to us again, except that they are now 30. I wanted to read this book partly to bring myself up to date with the case, but above all I wanted to hear it from Harry Markopolos.

`No one would listen' he proclaims by way of a title. The reason is staring us in the face, and it will be completely familiar to anyone who has worked in, or dealt with, any large and established organisation. To be listened to, you need status. Markopolos does not use the word status: those possessed of status, and who are listened to in consequence, know better than to blurt this out or are too dim and self-complacent to understand the point; but I actually saw the expression used in a recent report of an appeal against a planning application in England. The successful applicant was a large firm, the objector was a private citizen, and the court dismissed the objection because he `lacked status'. This is literally true. It was Madoff's perceived status that got so many to believe him for so long, but to appreciate how deeply ingrained the mentality is, just read the Introduction here. Interrogated in jail Madoff was calm and forthcoming until Markopolos was mentioned, at which Madoff became irate `You know what? He's really a joke in the industry.' There you have it - Who does this upstart think he is? I won't be exposed by the likes of him, and I speak for some great silent majority.

Madoff was, we hope, unique in some ways, but not in thinking like that. He deceived millions, but he was for real in his indignation about Markopolos. However, status is not the exclusive prerogative of those with ability. Everyone knows you can have brains without status, but you can have status without brains, as at the SEC. If there is a real villain in this book, it is not so much Madoff in Harry's mind as the Securities and Exchange Commission. I don't doubt Harry's moral drive to expose a monstrous crook and save the disaster that eventually overtook millions, but it was also an intellectual problem that he had his teeth into like a pit bull and could not let go of, something like finding the general solution of the quintic. With the SEC he was driven to near-despair by sheer incompetent, casual, established stupidity and inertia. You can see it in some of the comments made to justify ignoring Harry's submissions. A report in the (admittedly) respected journal MARHedge was set aside because it was `not one that...the Commission usually received.' To get away with that glaring admission of dereliction of duty it requires not just the executive who said it with a straight face to think this is OK, it takes brain-dead nodding donkeys of superiors to accept it as reasonable comment. Another important letter was ignored on the grounds that it was anonymous. Above all there was the barefaced claim that Markopolos lacked some superior insight which the Commission generously ascribed to itself and which by its very nature `refuted' the arguments of Markopolos. That's how you can refute arguments if the decision rests with you - you just define by fiat who has and does not have credibility.

Needless to say, Harry's quarrel with the Commission was not intellectual, it was emotional and from the gut. Mega-incompetence like this upset him more than mega-fraud did. Well, things worked out for him in a way they don't usually work out for whistleblowers, and given his opportunity he becomes Give-`em-hell-Harry like another famous Harry who won against the odds. I lapped this book up. Harry may not be any great literary stylist, but he is clear and literate, and it was not honed literary perfection that I was after, to put it mildly. I found this narrative absolutely riveting, and I was not bothered by its undoubted repetitiveness because that gave me a few more chances to get my head round the subject matter. As far as that latter is concerned, Markopolos hurls the accusation of a lack of basic knowledge, which the Commission had appeared to make against him, right back in their face. In any legal argument there are two sides to the matter, but from my own limited perspective I know which of them I am disposed to believe to be going on with.

Did nobody except Markopolos and his 3 collaborators, plus a few kopha prosopa who dared not open their mouths, really spot what Madoff was doing? According to Markopolos many did. The motives for keeping mum were various, but largely it was a matter of what he calls betting against the clock. Madoff was running a Ponzi scheme: in other words he was just sucking new investors' money into a great funnel to pay earlier investors, and as long as he could keep feeding the beast the payees were on to a good thing. How long might it all have lasted? Presumably it had to blow itself open sooner or later, but it was not the fault of Harry Markopolos that it was later. I suppose it might have been later still, and there is that much to say for the great banking crisis, little though it may be as a consolation. In your prayers or memories spare a thought for the naïve French nobleman who trusted Madoff and died the death of a noble Roman by his own hand. He accepted Madoff's returns because they were self-consistent, not bothering to ask whether Madoff had just had them typed.

three books were written on this subject: Arvelund, concentrating on the man, leBor concentrating on the victims and this book.
As an economist I found this book highly interesting, because it analysed the main cause of the whole scam; scoundrels are everywhere; stupid rich people idem; but it is the spectacular failure of the SEC that made the scam possible.
Finding a remedy is a major challenge to our profession.

Harry Markopolos is a truly remarkable and commendable bloke who against all odds and the formidable obstruction of the Securities Exchange Commission, tried desperately to expose Bernard Madoff's 'Ponzi Scheme'. Had the SEC taken heed of Mr Markopolos's first well documented submission in 1999 and rightly stopped Madoff's so-called Hedge Fund then it would have saved others from losing $44 billion from 2000 until Madoff handed himself into the police on December 10, 2008.

This book carefully and interestingly tracks the battle that Mr Markopolos and his informal team had to fight to get the SEC to stop stonewalling and launch its own investigations into this mammoth fraud, with a lot of the investigations and factual evidence already supplied to them by My Markopolos. In all from late 1999 to Madoff's confession in 2008, Markopolos made 5 written submissions to the SEC as well as many calls and meetings with SEC officials. He discounts corruption as a reason the SEC refused to act earlier in the face of the overwhelming and compelling evidence before them and prefers to attribute this horrendous act of incompetence to the systemic ignorance of the workings of the industry they were supposed to be regulating.

At the 'Madoff Affair'Congressional Hearings in Feb 2009, after the SEC leadership had given its evidence NY Congressman, Gary Ackerman told them, " one guy with a few friends and helpers discovered this thing nearly a decade ago, led you to this pile of dung that is Bernie Madoff and you stuck your nose in it, and couldn't figure it out." He went on to tell them that "You wouldn't find your backside with two hands if the light was on!"

Mr Markopolos also delved into the various Hedge Funds that fed $ billions of investors money into the Madoff Ponzi Scheme over the years with little on no 'due diligence' and concludes that they were either in on the scheme or willfully blind in view of the many £ millions of fees they earned from it.

A really good true yarn that does not require the reader to possess any great financial background.