Madoff investment scandal - Quiz
Madoff investment scandal
  • 1. What publication did Bernard Madoff explain his purported strategy to in 1992?
A) Barron's
B) The New York Times
C) The Wall Street Journal
D) Financial Times
  • 2. What index did Bernard Madoff compare his returns to in 1992?
A) Dow Jones Industrial Average
B) Standard & Poors 500-stock index
C) NASDAQ Composite
D) Russell 2000 Index
  • 3. What was the average annual return of the S&P 500 between November 1982 and November 1992 according to the text?
A) 18.0%
B) 16.3%
C) 20.0%
D) 12.5%
  • 4. What tools did The Wall Street Journal conclude Madoff used to cushion returns against market ups and downs?
A) Short selling and high-yield debt
B) Mutual funds and commodities
C) Convertible bonds and real estate
D) Futures and options
  • 5. How did Madoff say he made up for the cost of his hedges?
A) Foreign currency exchange and crypto
B) High-frequency trading and leverage
C) Real estate investments and dividends
D) Stock-picking and market timing
  • 6. What was another name for Madoff's split-strike conversion investment strategy?
A) A straddle
B) An iron condor
C) A butterfly spread
D) A collar
  • 7. How many S&P 100 stocks typically made up a position in Madoff's strategy?
A) 100-110
B) 50-60
C) 10-15
D) 30-35
  • 8. In Madoff's strategy, what was the sale of 'calls' designed to do?
A) Increase the rate of return
B) Decrease overall liquidity
C) Limit the portfolio's downside
D) Eliminate all market risk
  • 9. What funded the purchase of the 'puts' in Madoff's purported strategy?
A) High-yield bond dividends
B) Client withdrawal fees
C) Sales of the 'calls'
D) Federal government subsidies
  • 10. What was the name of the 1992 interview Madoff did with The Wall Street Journal?
A) Zuckoff and Ponzi
B) Picard and Sheehan
C) Avellino and Bienes
D) Standard and Poor
  • 11. What investment positions did Madoff place funds in during the 1970s?
A) Convertible arbitrage positions in large-cap stocks
B) Emerging market sovereign debt
C) Residential real estate mortgages
D) Cryptocurrency mining operations
  • 12. What promised investment returns did Madoff offer in the 1970s?
A) 18% to 20%
B) 25% to 30%
C) 10% to 12%
D) 5% to 8%
  • 13. When did Madoff begin using futures contracts on the stock index?
A) 1982
B) 2000
C) 1972
D) 1992
  • 14. What did Madoff place options on during the 1987 stock market crash?
A) Foreign currencies
B) Futures
C) Real estate trusts
D) Individual blue-chip stocks
  • 15. What were a few analysts performing due diligence unable to do regarding Madoff's fund?
A) Find the physical office location
B) Locate his brokerage clients
C) Contact his primary bank
D) Replicate past returns using historic price data
  • 16. What did Barron's raise the possibility of regarding Madoff's returns?
A) They resulted from high-frequency algorithmic trading
B) They were generated by foreign currency speculation
C) They came from illegal insider trading in tech stocks
D) They were due to front running his firm's brokerage clients
  • 17. Who is Mitchell Zuckoff?
A) A federal bankruptcy judge
B) A professor of journalism at Boston University
C) A principal investigator for the trustee
D) A Wall Street Journal reporter
  • 18. Who authored the book 'Ponzi's Scheme: The True Story of a Financial Legend'?
A) Bernard Madoff
B) David Sheehan
C) Mitchell Zuckoff
D) Irving Picard
  • 19. What federal law required private foundations to pay out 5% of their funds each year?
A) The Charity Protection Mandate
B) The Endowment Liquidity Statute
C) The 5% payout rule
D) The Foundation Security Act
  • 20. Approximately how much was Madoff on the hook for in withdrawals per year for every $1 billion in foundation investment?
A) $10 million
B) $50 million
C) $250 million
D) $100 million
  • 21. Without real investments, how long would the principal last at the 5% payout rate according to Zuckoff?
A) 5 years
B) 50 years
C) 20 years
D) 10 years
  • 22. Why did targeting charities help Madoff's Ponzi scheme?
A) Charities never requested financial statements
B) He could avoid the threat of sudden or unexpected withdrawals
C) Charities were exempt from federal tax audits
D) Charities were legally required to reinvest all profits with him
  • 23. When did Madoff admit he had not actually traded since during his guilty plea?
A) The 1970s
B) 2008
C) The late 1980s
D) The early 1990s
  • 24. According to Madoff's guilty plea, what happened to all of his returns since the early 1990s?
A) They were earned through international real estate
B) They came entirely from legitimate stock dividends
C) They had been fabricated
D) They were generated by treasury bonds
  • 25. Who is David Sheehan?
A) A founding partner of Avellino and Bienes
B) Financial journalist for Barron's
C) Author of Ponzi's Scheme
D) Principal investigator for trustee Irving Picard
  • 26. What did David Sheehan believe about the wealth management arm of Madoff's business?
A) It became a fraud only after the 1987 crash
B) It had been a fraud from the start
C) It was completely legitimate until 2008
D) It was originally a real estate firm
  • 27. Who was David Sheehan working as a principal investigator for?
A) Irving Picard
B) Mitchell Zuckoff
C) The Wall Street Journal
D) Bernard Madoff
  • 28. How did Madoff's operation differ from a typical Ponzi scheme regarding its brokerage arm?
A) It was very real and handled large trades for institutional investors
B) It was entirely nonexistent on paper
C) It was owned and operated by the federal government
D) It only operated online through automated servers
  • 29. What type of investors did Madoff's brokerage operation handle large trades for at the time of its shuttering?
A) Institutional investors
B) Foreign central banks
C) Retail day traders
D) Individual retirement account holders
  • 30. When was the Madoff investment scandal discovered?
A) Mid 1992
B) Early 2000
C) Late 2008
D) Late 2001
  • 31. What position did Bernie Madoff formerly hold at Nasdaq?
A) Chief Compliance Officer
B) Senior Managing Director
C) Rules and Compliance Officer
D) Chairman
  • 32. What type of financial scheme did Madoff admit his business was running?
A) Pyramid scheme
B) Ponzi scheme
C) Pump and dump scheme
D) Bank fraud scheme
  • 33. In what year did Madoff found Bernard L. Madoff Investment Securities LLC?
A) 1960
B) 1970
C) 1992
D) 1980
  • 34. Who served as senior managing director and chief compliance officer of Madoff's firm?
A) Peter Madoff
B) Andrew Madoff
C) Saul Alpern
D) Mark Madoff
  • 35. What was the relationship of Shana Madoff to Peter Madoff?
A) Sister
B) Wife
C) Daughter
D) Mother
  • 36. Who alerted federal authorities, leading to Madoff's arrest?
A) Madoff's sons
B) Peter Madoff
C) Harry Markopolos
D) Randall Smith
  • 37. When was Bernie Madoff arrested?
A) December 11, 2008
B) December 31, 2008
C) June 29, 2009
D) March 12, 2009
  • 38. How many federal crimes did Madoff plead guilty to?
A) 20
B) 5
C) 50
D) 11
  • 39. What was the amount of restitution ordered with Madoff's sentence?
A) $64.8 billion
B) $50 billion
C) $35 billion
D) $170 billion
  • 40. In what year did Madoff die in prison?
A) 2018
B) 2021
C) 2015
D) 2009
  • 41. What did prosecutors estimate the size of the fraud to be?
A) $35 billion
B) $50 billion
C) $64.8 billion
D) $170 billion
  • 42. Who was the whistleblower whose repeated warnings about Madoff were ignored?
A) Harry Markopolos
B) Randall Smith
C) Saul Alpern
D) Charles Weiner
  • 43. As early as what year had questions about Madoff's firm been raised?
A) 1999
B) 1980
C) 1970
D) 2008
  • 44. What ranking was the legitimate trading arm of Madoff's business among Wall Street market makers in 2008?
A) Second-largest
B) Tenth-largest
C) Sixth-largest
D) Largest
  • 45. Which foundation was forced to temporarily close due to Madoff's asset freeze?
A) The Rockefeller Foundation
B) The Ford Foundation
C) The Bill and Melinda Gates Foundation
D) The Picower Foundation
  • 46. Who was Madoff's high school sweetheart and co-founder of his fledgling business?
A) Charles Weiner
B) Saul Alpern
C) Ruth Alpern
D) Shana Madoff
  • 47. What was the profession of Saul Alpern, Madoff's father-in-law?
A) Sprinkler installer
B) Stockbroker
C) Accountant
D) Lifeguard
  • 48. Initially, how did Madoff's firm make markets by quoting bid and ask prices?
A) New York Stock Exchange floor
B) National Quotation Bureau's Pink Sheets
C) Nasdaq computer terminals
D) The Lipstick Building
  • 49. Who wrote a 1992 Wall Street Journal article describing Madoff as a master of the off-exchange 'third market'?
A) Charles Weiner
B) Saul Alpern
C) Harry Markopolos
D) Randall Smith
  • 50. Who was Charles Weiner in relation to Bernie Madoff?
A) Nephew
B) Father-in-law
C) Brother
D) Son
  • 51. Which of Madoff's sons invested his own money in his father's fund?
A) Peter Madoff
B) Andrew Madoff
C) Mark Madoff
D) Charles Weiner
  • 52. Around what year did Mark Madoff stop investing his own money in his father's fund?
A) 1960
B) 2001
C) 1992
D) 2008
  • 53. In which building was the business of Madoff Securities located?
A) The Chrysler Building
B) The Empire State Building
C) The Lipstick Building
D) The World Trade Center
  • 54. On which floor of the Lipstick Building was the investment management division located?
A) 10th floor
B) 1st floor
C) 17th floor
D) 50th floor
  • 55. How many people were employed by the investment management division (hedge fund) staff?
A) Fewer than 24
B) 28
C) 4,800
D) 100
  • 56. How many people were employed in Madoff's separate branch office in London?
A) 4,800
B) 50
C) 28
D) Fewer than 24
  • 57. How did investors typically gain access to Madoff's fund?
A) Public advertisements on television
B) Cold calls from Madoff himself
C) Word-of-mouth referral
D) Random selection from a lottery
  • 58. How did people who met Madoff in person describe his demeanor?
A) Apparent humility
B) Cold and distant
C) Aggressive and intimidating
D) Arrogant and boastful
  • 59. Who was one of the most prominent promoters whose fund Ascot Partners steered $1.8 billion to Madoff?
A) J. Ezra Merkin
B) An unnamed investor
C) Union Bancaire Privée
D) Diana Henriques
  • 60. What were Madoff's 'unusually consistent' annual returns around?
A) 20%
B) 5%
C) 10%
D) 35%
  • 61. What was the year-to-date total return on the S&P 500-stock index in late 2008?
A) Positive 10.5%
B) Zero percent
C) Positive 5.6%
D) Negative 38%
  • 62. How did Madoff make his investors feel?
A) Pressured and exploited
B) Safe
C) Anxious and hurried
D) Wealthy and invincible
  • 63. Which organization merged with the Bond Market Association in 2006 to form SIFMA?
A) Bond Regulatory Association
B) Securities and Exchange Commission
C) National Investment Association
D) Securities Industry Association
  • 64. How many terms did Peter Madoff spend on SIFMA's board?
A) Two terms
B) One term
C) Four terms
D) Three terms
  • 65. How much money did the Madoff brothers donate to SIFMA from 2000 to 2008?
A) $56,000
B) $10,000
C) $100,000
D) $560,000
  • 66. When did Shana Madoff meet Eric Swanson?
A) February 2006
B) March 2004
C) April 2003
D) December 2006
  • 67. Who raised questions about unusual trading at a Bernie Madoff fund in March 2004?
A) Shana Madoff
B) Eric Swanson
C) John Nee
D) Genevievette Walker-Lightfoot
  • 68. What was Genevievette Walker-Lightfoot told to concentrate on instead of the Madoff fund trading?
A) SIFMA compliance events
B) A Ponzi scheme complaint
C) An unrelated matter
D) Peter Madoff's regulatory requests
  • 69. Who emailed Eric Swanson in February 2006 about a complaint that Bernard Madoff might be running the biggest Ponzi scheme ever?
A) Peter Madoff
B) Genevievette Walker-Lightfoot
C) Shana Madoff
D) John Nee
  • 70. When did Eric Swanson begin to date Shana Madoff?
A) December 2006
B) April 2003
C) April 2006
D) September 2006
  • 71. When did Eric Swanson leave the SEC?
A) 15 September 2006
B) February 2006
C) December 2008
D) December 8, 2006
  • 72. In what year did Eric Swanson and Shana Madoff marry?
A) 2007
B) 2003
C) 2006
D) 2008
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