The Algorithm that revealed Madoff’s $65 Billion Ponzi Scheme

Bernie Madoff’s $65 billion Ponzi scheme wasn’t just shocking...it was mathematically impossible. I’ll show you the simple formulas and metrics that exposed his fraud.

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[GoingSouthGarage]

I had known that Harry Markopolos exposed Madoff but not the math behind it. Thanks.
It also bothered me that Bernie's wife, Ruth, was allowed to keep 2 million while so many victims lost everything.

[MadeleineTakam_Info_on_Profile]

The perfect example of ‘The rich get richer, through either luck, or corruption’.

[michaellewis]

i suspect some clients did know something was wrong - but - just speculation - some of those thought he may have been front running trades.
i.e cheating but cheating for them, turns out he was just cheating them.

[Sam_on_YouTube]

I was working on the highest priority investigation at the New York AGs office when this happened. We had priority in the copy/print office and other nice resources in our investigation of pay to play in the control of the 100 million dollar state pension find. And then suddenly we were the 2nd highest, as resources shifted to the Madoff scam.

[roccov]

At 0:57 the newspaper being shown has the Robert Deniro version of Bernie. 😂

[paveloleynikov]

Wait. He was NASDAQ chairman and had broker company at the same time? It sounds like crazy conflict of interest.

[channelview]

This appears to be a classic case of what social scientists call nominative determinism. His name is Madoff and he "made off" with everybody's money.

[jpalmz]

What I couldnt understand is how nobody checked that trades / transactions actually happened. Even without doing maths to work out returns then this would indicate complete fraud. Especially with the number of blue chip companies on the list. The FCC must have been compliant.

[johnstirling]

A couple of things. If the SEC had actually investigated the "claimed" trades and measured them against the actual trades closed out on the exchange there would have been an obvious shortfall.
Also components has a second "N".

[ТимофейЧерников-щх]

2.5 sharpe is not unrealistic but it's not achievable with investing. Only trading strategies can get such sharpe, but they probably cannot be deployed at such scale

[donaldjohnson-yn]

The only people who ended up losing from Madoff's situation, were the early investors who took their winnings out of his fund. The bankruptcy trustee sued them to return anything more than what they had invested and bankrupted several of them. Everyone else was made whole.

[plm]

Jim Simons' Medallion Fund has an average Sharpe ratio of 6, with no negative months. It also achieves annual returns that are 7 to 8 times higher than Madoff's. Good performance does not equal fraud.

[tonycrabtree]

Like every ponzi… Just try to get your money out. You’re gonna get some push back.

[rbudd]

New to your channel (and frankly, can't remember how I stumbled acrost it) -- but dayamm, thank you! I've viewed a couple of these now, and quite appreciate the let-me-break-this-down approach. So many topics need this for the layman. Carry on kiddo, good work !

[tedjones-hozk]

The name Madoff should have been a RED FLAG, a guy named madoff and he handles your money. What else is he going to do, he made off with their money.

[scbtripwire]

Madoff's scam was a pyramid scheme (in that that's how he distributed the money) so there was nothing legit about his method. :/

[dougmorgan]

Love your show, and your science theme background.

[jhors]

Well researched and presented Dee. I appreciate and enjoy your channel.

[jonesconrad]

just what I need for a break from trying to figure out this python silliness.

[Rubens_]

Interesting video. A few remarks:
- Lots of repetition of who BM was and so on
- Missing causalities -> put options are more expensive in general, because of demand or fear of losses? Unsure about this one as the group selling put options is betting on rising markets.