CNBC on Madoff; Fact v. Fiction

Yes, your's truly, Bernie Madoff, remains a major media star, as evidenced by today's CNBC all-day review of everything Madoff, including a subliminal second look at what exactly JPMorgan's role was in the course of enabling the cash transfer of as much as several hundred million dollars every day between my checking account and select accounts domiciled at JPMorgan and Goldman.

I've told you all of this before. And, one or two investigative journalists (including my gal pal Erin Arvedlund) told you the same thing. Some of you believed me, others didn't, simply because you questioned my credibility. Ha!

Well, for those who chose not to appreciate my insight, perhaps the image below, which appears on the front page of JPMorgan's 100-page "defense manifesto" in connection with the case brought by Irv Picard against that big bank falls into the "a picture tells a thousand words."

Given the thousands of visitors that are visiting me today, let's do an update on other observations that I've made, some of which have been largely swept under the rug, overlooked and/or under-appreciated.

1. Irv Picard's law firm has billed out close to $700 million in fees in connection with their role administering the bankruptcy and claw-back actions. Those fees have NOT come from funds recovered on behalf of investors, those legal fees have been borne by SIPC, a consortium owned and operated by the broker-dealer community, who pay annual fees into SIPC.

2. FINRA--the self-regulatory organization that oversees registered broker-dealers, did in fact invest employee pension funds in my firm's investment program. They might have been bobbleheads for doing so, but they got in late, and like every other investor, they chose to overlook the obvious red flags in search of the proverbial golden rainbow.

3. As CNBC's Andy Sorkin made mention of today, there still seems to be more than a few people who remain convinced that members of my family, particularly my lovely wife Baby Ruth, my two sons, my brother and even my shoe-loving niece Shana knew what I was doing. Let me address this once again:

i. Mark (may he rest in peace) nor my idiot son Andrew knew what was going on. As far as Andrew is concerned, that statement applies to just about anything--although he was always good at fly-fishing.

ii. Yes, my sons profited handsomely as a result of my generosity. Should they (or their cousin, Shana) ever have wondered how or why they were getting paid so much, despite the fact that our market-making and brokerage business was bringing in less revenue than their 3 salaries and bonus combined? Maybe. But that same rule of logic should apply to the heads of every major bank and more than dozens of public companies.

iii. My brother Peter was arguably my #2. That said, I take a #2 every day, and there's a reason why he only owned 1% of my business. I'm truly sorry that he is headed to jail, but he's a reasonably good bridge player and I'm confident he'll find a good game to play in.

4. Let's go on to another topic--investor claims. I told every direct investor [repeatedly] that they would ultimately receive back 100 cents of their principal investment as a result of  the efforts made by Irv Picard. Based on the pending 3rd tranche of payments to claimants, which is slated to be made in the next 4-6 weeks, and other than true hardship cases, anybody that sold their claim at a steep discount should be ashamed of themselves. In fact, I repeatedly advised people to be BUYING claims that were being offered at substantial discounts to par value.  I was right, as usual.

5. Human beings generally repeat the same mistakes over and over; and they generally do whatever the idiot next to them is doing. Don't ask me why. It's not just the 3-Blind Mice Theory. Its deeper than that.
Maybe its because of the Internet. After all, the new information age has allowed for universal dissemination of un-edited nonsense that influences thought processes in a matter of nano-seconds. If you see it in a newspaper, read it on the web, or hear it from a talking head, it must be true, right?

Here's a classic example: Right now, the major equities market indices are at, or very close record highs. Retail investors are being told they should jump back, if only to avoid missing out on the next 50% run-up in stock prices and because those bonds they bought at a premium to par value are not likely to maintain their value because interest rates can only go up from their current levels (causing the price of the bonds to decline). This tells me that stock prices are at dangerously high levels.

When everyone starts shouting "how great this is, you need to invest in it", I think of APPL. I loved the stock when it was in the high 300's and low 400's 20 months ago. Last year at this time, when the stock was on its way past 600 and towards 700--APPL was profiled in every single media outlet and was talked about every day on every business TV show--and everyone was saying it was likely to trade at 1000 before long. That's when I knew it was time to take the chips off the table.

I could remind you what I had to say about Gold, Oil and even Facebook...but I''ll let you do your own research on that and search back through this blog. Afterwards, if you want to subscribe to my private newsletter, the 2013 rate is more than fairly-priced.
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