Regarding the Bernie Madoff scandal, Megan McArdle raises two interesting points:
Major Fraud is easier than Minor Fraud
Because “The SEC is looking for people pushing the envelope.” rather than completely making numbers up, it may be easier in many ways to get away with brazenly making numbers up than to inflate the real numbers by 10%.
But more importantly…
Documents Do Get Changed
One of the investors pulled in by the scam, Nicola Horlick quietly removed the following text from her website: “Robust and thorough due diligence is at the heart of our firm’s investment process. Our detailed manager monitoring programme ensures that our clients’ investments are subject to on-going and effective governance.”
An updated version of the text has since been replaced, but the disappearance was widely noted and suspicions tend towards a cover-up. The internet is a lousy place to keep secrets, but it’s tempting to think that every time this happens in the public eye it happens many more times in private. We’re left to wonder how many documents on enterprise content management systems have been altered to correct them in hindsight.
Tags: fraud