Securities and Exchange Commission v. Peter B. Madoff, Case No. 12-civ-5100. On June 29, 2012, the SEC charged Peter Madoff, brother of Bernie Madoff, with fraud, making false statements to regulators, and falsifying books and records. Madoff served as Chief Compliance Officer and Senior Managing Director at Bernard L. Madoff Investment Securities, LLC (BMIS) from 1969 to 2008. Madoff generated stacks of compliance documents setting out robust policies and procedures over BMIS’s investment advisory operations. This was merely to paper the file, however, as no policies or procedures were implemented and the reviews were not performed.
Just prior to the collapse of the decades-long Bernie Madoff fraud scheme, the Madoff brothers decided to distribute remaining investor money to family, friends, and favored employees. Peter Madoff assisted in choosing the recipients and rushed to withdraw $200,000 from BMIS’s bank account for himself.
In addition to creating false compliance materials, Peter Madoff made fake broker-dealer and investment adviser registration applications filed by BMIS, as well as failed to implement and review required policies and procedures. Despite his misconduct, Madoff was rewarded with tens of millions of dollars through salary and bonuses, fake trades, sham loans, and direct undocumented transfers of investor funds to himself.
Madoff is charged with violating and aiding and abetting violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 207 of the Investment Advisers Act of 1940. Madoff is also charged with aiding and abetting violations of Sections 15(b)(1), 15(c) and 17(a) of the Exchange Act and Rules 10b-3, 15b3-1, and 17a-3 thereunder, and Sections 204, 206(1), 206(2), 206(4), and 207 of the Advisers Act and Rules 204-2 and 206(4)-7 thereunder. The SEC seeks financial penalties and a court order requiring Peter Madoff to disgorge his ill-gotten gains. The U.S. Attorney’s Office for the Southern District of New York filed parallel criminal charges against Madoff.