Online from: 1993
Subject Area: Accounting and Finance
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|Title:||Racketeer Influenced and Corrupt Organizations Act (RICO) and the mafia must now welcome organizational crime|
|Author(s):||F.N. Baldwin, (Levin College of Law, The Centre for International Financial Crimes Studies, Holland Law Center, University of Florida, Gainesville, Florida, USA Institute of Advanced Legal Studies, University of London, London, UK)|
|Citation:||F.N. Baldwin, (2010) "Racketeer Influenced and Corrupt Organizations Act (RICO) and the mafia must now welcome organizational crime", Journal of Financial Crime, Vol. 17 Iss: 4, pp.404 - 416|
|Keywords:||Corruption, Crimes, Stock markets, United States of America|
|Article type:||Research paper|
|DOI:||10.1108/13590791011082760 (Permanent URL)|
|Publisher:||Emerald Group Publishing Limited|
|Acknowledgements:||This paper could not have been completed without the excellent research and assistance given by Jenna F. Collier, 3L.|
Purpose – The purpose of this paper is to explore organized crime on Wall Street and expose the lack of regulatory control thus impacting upon innocent investors in the money market. Organized crime has for many years reaped rewards from unsuspecting investors. This exploration, however, aims to turn away from organized and focus on organizational crime. Specifically, the “highly respected” investor Bernard Madoff.
Design/methodology/approach – This paper examines the impact upon innocent investors of the US Securities and Exchange Commission's (SEC) response to repeated efforts by a whistle blower to investigate an “alleged” out-of-control “Ponzi” scheme.
Findings – Bernard Madoff's multi-billion dollar Ponzi scheme was never uncovered by the SEC. The fact is that the economic recession did the SEC's work. The SEC appeared to be willfully blind. Without the economic recession, some suggest that the Madoff Ponzi scheme might have involved close to 100 billion dollars.
Originality/value – The SEC's regulatory effectiveness in regulating the financial industry was found wanting for over ten years. No regulatory agency ever determined Madoff to be in serious violation of any laws, hence others within the financial industry continued to engage in similar illicit organizational activity. The question remains whether regulatory agencies have learned a lesson from the Madoff episode or is the organizational Ponzi scheme alive and well?
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