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Madoff Probed For Insider Trading??

From: Barney Frank
To: Mary Shapiro

RE: Madoff Insider Trading Probe

Dear Commissioner Shapiro:
In light of recent events, in which Mr. Madoff, who I was given to understand has been barred by your agency from promoting investment advice, has not only been flaunting this ban, but he has been miraculously prescient in predicting the direction of the markets.

Our staffers have been following his blog on a continuous basis, and not only did he instruct his friends to do "a Goldman" by going short the major indexes at the very top of the market last month, but he somehow knew the exact spot to cover those shorts (this past Thursday, when the Dow briefly traded below 10,000), as well as the exact time to sell put options on major indexes when the VIX surpassed 40 (Thursday/Friday of last week).

The timing of these calls is exponentially more suspect than the timing of my very good friend and contributor Jamie Dimon's call when JPMorgan coincidentally redeemed their $250 million investment in Madoff's firm in the months immediately prior to the firm's demise.

Its patently clear to us that Mr. Madoff has access to inside information, as nobody could predict these types of events. Either Madoff's blog is manipulating the markets, or more likely, he has access to inside information. As such, I implore you to initiate an insider-trading investigation and I expect you to explain how the SEC has once again allowed Mr. Madoff to capitalize on investor sentiment.

Barney Frank

To: Barney Frank
From: I. Picard

Congressman:

If I might intercede; Mr. Madoff is not the only one that has scored massive gains in connection with recent market trading. The most recent $25 million in fees that we invoiced SIPC for was invested in a momentum-trading strategy that delivered a 25% return in the most recent three months.

Yes, we too visit Mr. Madoff's blog on a regular basis, and we find his investment advice to be invaluable. In point of fact, when we recoup the $2 billion from the Picower family (presuming they can remember where they buried the key to the safe deposit box), we will be recommending that, prior to distributing funds to claimants, the $2 billion will be managed for 12 months in a special trading account employing Madoff-recommended strategies.

It is our expectation that the profits generated from these strategies will more than offset the $5 billion (+/-) of actual SIPC-approved claims, and will more than likely surpass the $50 billion in Bernie Dollar losses experienced by the entirety of those that received account statements from lovely Nan Bongiorno and her team.
I. Picard
Bankruptcy Trustee, Bernard L. Madoff Investment Securities

Full post as published by Bernard Madoff on May 11, 2010 (boomark / email).