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Business

Madoff settles civil fraud case with SEC

Latest update : 2009-02-10

Alleged financial swindler Bernard Madoff reached a partial settlement with the US Securities and Exchange Commission (SEC) on a civil fraud case, a deal that should have no effect on the criminal probe into his fraudulent activities.

AFP - Alleged Wall Street investment scam mastermind Bernard Madoff reached a partial settlement on a civil fraud case, regulators said Monday.
   
But analysts said the deal had no effect on a wide-ranging criminal probe into what is believed to be one of the biggest securities fraud cases on record.
   
The Securities and Exchange Commission (SEC) said Madoff, the alleged mastermind of a 50-billion-dollar fraud, agreed to a consent order filed in federal court by the financial market regulator.
   
Madoff agreed to a proposed settlement "without admitting or denying the allegations of the SEC's complaint," filed on December 11, the SEC said.
   
Upon acceptance by the court, the order would extend a freeze on Madoff's assets. But it would leave the questions of repayments and penalties "to be decided at a later time."
   
But the SEC said that by accepting the consent order, Madoff agrees that "the facts of the complaint are established and cannot be contested by Madoff."
   
Madoff also faces criminal charges in connection with the scheme that lost some 50 billion dollars in a years-long pyramid fraud. He has been charged but not been indicted and there is no immediate indication of when he could go to trial.
   
Jacob Frenkel, a former prosecutor and SEC official who is now in private practice, said the civil settlement was largely irrelevant to the overall investigation.
   
Madoff "is never coming back in the industry and the (court-appointed) receiver is collecting all of his assets, so he has no reason to care or continue a fight with the SEC," Frenkel said.
   
"This has no outcome at all on any other proceeding."
   
Frenkel said Madoff "has an interest in his cooperating as long as possible" because any end to the cooperation could result in an indictment and possible incarceration.
   
The settlement "shows some progress being made" in the probe, said Christopher Bebel, a former SEC attorney who is in private practice in Houston, Texas.
   
But Bebel said the deal is insignificant because Madoff cannot pay back the customers to any significant degree.

Date created : 2009-02-10

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