From the Editors
This book exists because the Madoff fraud has become, against everyone's wishes, a permanent fixture of the American financial-regulation syllabus. Almost two decades after Bernard L. Madoff was led out of his Manhattan apartment in handcuffs, the case remains the most efficient single vehicle we have for teaching what every other set of materials teaches in pieces: the failure of disclosure regimes, the limits of examination-based supervision, the moral hazard built into the feeder-fund economy, the awkward arithmetic of recovery under the Securities Investor Protection Act, and the social physics of trust in a market that nominally runs on numbers.
What we have not had, until now, is a single volume that takes the secondary literature on Madoff seriously as literature — as a body of argument that, taken together, has reshaped how financial regulators, auditors, fund administrators, and courts think about fraud detection. The scholarship is scattered across law reviews, finance journals, sociology quarterlies, an EDHEC working paper that became canonical almost by accident, and one bracing trade memoir by a man who could not get anyone in Boston or New York to listen to him. Read individually, each piece is a useful provocation. Read together, in order, they tell a coherent story about how a regulatory system designed to prevent exactly this kind of fraud failed to prevent it, and about what that failure has cost — financially, doctrinally, and morally.
We have written this collection for the JD or LLM student who has finished a basic securities-regulation course and is now ready to see the federal apparatus stress-tested against a single, well-documented catastrophe. We assume familiarity with the 1933 and 1934 Acts, with the Investment Advisers Act of 1940, and with the Investment Company Act of 1940. We do not assume familiarity with options pricing, with the operational mechanics of a fund-of-funds, or with the sociology of affinity networks — and where those bodies of knowledge are load-bearing, we gloss them inline.
Each chapter is a critical summary of one major contribution to the Madoff literature, written in our own voice but faithful to the source. Footnotes are bluebook; cross-references between chapters are marked in brackets and will resolve to hyperlinks in the digital edition. A doctrinal takeaway closes every chapter, naming the rule, doctrine, or policy lever the chapter illuminates.
We invite the reader to treat the book as a casebook of a peculiar kind — one whose central case never went to a Supreme Court argument, but whose lessons are nonetheless waiting for the next examination cycle, the next custody rule, the next whistleblower submission that arrives in the wrong inbox.
— The Editors