A dozen years ago, when I was on the faculty at Boston College, I was teaching in the Master of Science in Finance program. One of my students was a quantitative analyst at a hedge fund. This guy was an excellent student who instinctively understood derivatives and their pricing models. He was an active member of the Boston Security Analysts Society and provided great encouragement as I toiled with the CFA exams.
I joined Forbes in 1997. Every now and then I spoke with this former student of mine. Eventually, he quit his job. He told me he had become disillusioned with the whole Wall Street game and was convinced there was a lot of fraud going on in the industry. He said he was going into business for himself investigating fraud in the securities industry. Without being specific, he said he was on to one of the biggest Ponzi schemes ever. He also told me about his frustrations dealing with the SEC.
Sounds kind of paranoid, doesn't it? I knew this guy wasn't crazy, but I had to wonder if he wasn't exaggerating a bit. Well, imagine my surprise when I read about him on the front page of the Wall Street Journal on Thursday morning. His name is Harry Markopolos and he has been mentioned on my blog before. It turns out the Ponzi scheme Harry was looking into was the one run by Bernie Madoff.
Thanks Harry for doing such a great service to your country. I wish the powers that be had paid more attention to what you had to say long ago.
