International Law

Victims of Madoff Deserved It

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Joe Nocera, writing at the the New York Times, exhibits the typical frustration when confronted with the Madoff fraud; how couldn't people see through Bernie?

"Did the S.E.C. foul up? You bet. But that doesn't mean the investors themselves are off the hook. Investors blaming the S.E.C. for their decision to give every last penny to Bernie Madoff is like a child blaming his mother for letting him start a fight while she wasn't looking.

TV cameras surrounded a woman named Sharon Lissauer. She had not been wealthy, she said, but she's lost everything. She didn't know what she was going to do. She was weeping.

It was hard not to feel sad for her -- indeed, for all the victims of Mr. Madoff's evil-doing. But one also has to wonder: what were they thinking."

But, Mr. Nocera who regularly writes on fraud in the securities industry does not give us an answer to what Sharon Lissauer was thinking.

Instead, we get a dull morality tale.

"These were people with a fair amount of money, and most of them sought no professional advice," said Bruce C. Greenwald, who teaches value investing at the Graduate School of Business at Columbia University. "It's like trying to do your own dentistry."

Mr. Hedges said, "It is a real lesson that people cannot abdicate personal responsibility when it comes to their personal finances."

And that's the point. People did abdicate responsibility -- and now, rather than face that fact, many of them are blaming the government for not, in effect, saving them from themselves.

Indeed, what you discover when you talk to victims is that they harbor an anger toward the S.E.C. that is as deep or deeper than the anger they feel toward Mr. Madoff.

There is a powerful sense that because the agency was asleep at the switch, they have been doubly victimized. And they want the government to do something about it."

Yes, that is a very satisfying tale: all these people, from various walks of life and many highly accomplished, all abdicated responsibility.  

This is not an explanation, Nocera simply lacks the necessary imagination to recreate the sham Madoff flashed.  Lacking this talent, Nocera falls back on simple morality tales.

Full post as published by Misleading Advertising Law on March 16, 2009 (boomark / email).