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Bernie Madoff’s Prison Letter To CNBC Blasts Corrupt Banking System

madoff prison letter CNBC

Bernie Madoff’s prison letter, a rare outburst from the lone banker who went down in recent years as Americans complained of rife corruption, spoke of the endemic problems within the financial system that remain four years to the month after the Ponzi schemer’s house of cards collapsed.

Madoff’s prison letter to CNBC laments a continuing lack of regulation, one Bernie says is not a new thing and presents some serious structural risks to the system. In the missive, the convicted felon serving out a prison sentence speaks of “dark pools,” and their inherent potential detriment to honest trading:

“Institutions have always attempted to guard this buy and sell information from exposure to the market for fear of being FRONT RUN. Certainly they are entitled to have this right of confidentiality … This being said, the more secret this information. The more valuable this information is to those that can obtain it. Therein lies the problem. It is naive to think that there will be no leakage of this information … Although one would be lead to believe that with the recent spate of Insider trading prosecutions, that insider trading is a new development. This is false. It has been present in the market forever, but rarely been prosecuted. The same can be said for front running of orders.”

Among is other complaints, Bernie Madoff’s prison letter charges:

“The other area of discussion involves the growth of hedge funds, particularly feeder funds. In spite of the early held belief. of which I was of this opinion, that the extra layer of costs related to commissions and profit sharing that went along with feeder funds …”

madoff prison letter CNBC

” … They have continued to grow. It has been this additional layer of costs that have created the need for more risk to be taken to earn worthwhile returns. This has created a minefield of regulatory problems involving the very reasons that the desire for a lack of transparency has grown.”

The emailed Madoff prison letter was sent to a “handful” of academics and lawyers with whom he has been communicating, as well as CNBC. You can read the Madoff letter from prison in its entirety over at Global Post.

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