Biz media helped Madoff along
Jeff Poor of the Business & Media Institute writes about an appearance on CNBC by Jon Najarian in which the founder of optionMONSTER argues that the business media helped disgraced hedge fund manager Bernard Madoff unveil his Ponzi scheme on investors.
Poor writes, “According to Najarian it made sense for Madoff to start generating press to attract investors.
“‘What I did over the past week is that I was looking up articles for when was the first time Bernie started showing up in the press?’ Najarian said. ‘And if Iâ€™m right and it was the late 80s — thatâ€™s when Iâ€™d say, just using my forensic hat, thatâ€™s when Iâ€™d say he was likely to have started this Ponzi.’
“Najarian was correct about Madoffâ€™s earliest appearances in the media, as the results from a Nexis search reveal. And he started showing up prominently in mainstream media around the time the payment for order flow practice started receiving regulatory scrutiny from lawmakers. Madoff was a defender of the practice and was cited in a May 16, 1993 Associated Press story, ‘Paying for Stock Orders: Bribery or Competitive Edge?.’
Madoff then appeared in some prominent magazine articles. Ironically, he was featured in a 1999 Forbes magazine article about the rise of the online trader and the prelude to the dot.com bubble. ‘The problem is, there is no buffer between the customer and his own tools of self-destruction,’ Madoff said in the Jan. 25, 1999 issue of Forbes.
Madoffâ€™s media appearances increased throughout the 1990s and into this decade. Najarian claimed that was an effort by Madoff to draw more attention to himself.
“‘Because then you can bring the suckers to you,’ Najarian said. ‘In other words, if I go to the press — Iâ€™m not going to go to the press when I can still make 50-cent wide spreads, but as those margins get eroded and as everybody else gets into this business, which we both know they did â€“ everybody on Wall Street was in the payment for order flow business, buying order flow from customers because they said Iâ€™m faster than them and I can trade on the bid/ask spread â€“ if everybody gets into that business all of a sudden he canâ€™t make enough money to pay the first investors.’”
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