Bernard “Bernie” Madoff arrested and charged with securities fraud- ponzi scheme

Dec. 11 (Bloomberg) — Bernard Madoff, president of Bernard Madoff Investment Securities, a market maker for hedge funds and banks, was charged with securities fraud by federal prosecutors in New York in a scheme that totaled more than $20 billion, according to a person familiar with the case.

Madoff was arrested today by the FBI and is scheduled to appear in court this afternoon in Manhattan. Madoff, 70, was charged with a single count of securities fraud.

“Bernard Madoff is a longstanding leader in the financial services industry,” said defense lawyer Dan Horwitz as he waited for Madoff’s case to be called. “We will fight to get through this unfortunate set of events. He’s a person of integrity.”

Madoff’s New York-based firm was the 23rd largest market maker on Nasdaq in October, handling a daily average of about 50 million shares a day, exchange data show. The firm specialized in handling orders from online brokers in some of the largest U.S. companies, including General Electric Co. and Citigroup Inc.

Madoff started his firm in 1960 with $5,000 of savings and took advantage of securities-law changes in the 1970s designed to spur competition in U.S. stock markets, according to a profile posted on the Web site Finance Tech.

He was chief of the Securities Industry Association’s trading committee in the 1990s and early this decade, where he represented brokerage firms in discussions with regulators about new stock-market rules as electronic-trading systems and networks gained prominence.

75 Percent

Madoff, who owned more than 75 percent of his firm, and his brother Peter are the only two individuals listed on regulatory records as “direct owners and executive officers.”

Peter Madoff was a board member of the St. Louis brokerage firm A.G. Edwards Inc. from 2001 through last year, when it was sold to Wachovia Corp.

The Madoff firm had about $17.1 billion in assets under management as of Nov. 17, according to NASD records. At least 50 percent of its clients were hedge funds, and others included banks and wealthy individuals, according to the records.

The case is U.S. v. Madoff, U.S. District Court for the Southern District of New York (Manhattan)

To contact the reporter on this story: David Glovin in U.S. District Court in New York at dglovin@bloomberg.net and; Bradley Keoun in New York at bkeoun@bloomberg.net.