Could technology have prevented the Madoff swindle ?

June 29, 9:48 PMDC Technology ExaminerTanya Gupta

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I(AP Photo/ Louis Lanzano)
 

According to Financial Times, use of technology may have prevented the size of the Madoff fraud.  Madoff, who stole a reported $50bn from thousands of investors around the world, received a 150-year sentence today, the statutory maximum for the 11 criminal counts he pled guilty to,.  The judge said it was an "extraordinarily evil" fraud that took "a staggering toll".

A Financial Times article,  quoted Jim Vos, who runs Aksia, a hedge fund advisory firm.  Mr. Vos mentioned the fact that Mr Madoff mailed paper copies of his trading records to clients rather than providing them with electronic access to his trading platform. FT quoted Mr. Vos as saying that paper copies provide a hedge fund manager with the end of the day ability to manufacture trade tickets that confirm the investment results.  This would keep investors from detecting fraud. 

Computer Weekly also pointed that technology could simplify the complexities of the investment sector.  CW reported that technology could increase transparency and prevent investment fraud, and according to Brian Taylor, financial services consultant at BTA Consulting, the underlying customer that is affected by an investment should be notified immediately. Electronic communication is the best way of doing this.  Mr Taylor, in his interview recommended that regulators should seriously consider having a common client identification system which could notify an investor, by e-mail or SMS, of any activity on their account.