Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Monday, June 6, 2011

SEC & Madoff Employee Settle Fraud Charges

The SEC proposes to settle charges that Eric Lipkin, a longtime employee at Bernard L. Madoff Investment Securities LLC (BMIS), helped Bernard L. Madoff and his firm deceive and defraud investors and regulators about the massive Ponzi scheme.  If approved by the court, Lipkin will consent to a proposed partial judgment, which will impose a permanent injunction against Lipkin and require him to disgorge ill-gotten gains and pay a fine in an amount to be determined by the court at a later time.

 According to the SEC's complaint, for more than a decade, Lipkin helped Madoff defraud investors and mislead auditors and regulators about Madoff’s fraudulent, multi-billion dollar advisory operations. According to the complaint, Lipkin processed payroll records for “no-show” employees, falsified records of investors’ account holdings, and played a role in executing the entirely fictitious investment strategy that Madoff and BMIS claimed to be pursuing on behalf of its clients. 

Lipkin also helped Madoff deceive regulators by preparing fake Depository Trust Clearing Corporation (DTCC) reports showing the sham investments for clients. Lipkin received annual bonuses from the firm, including for his work to mislead auditors and examiners, and he received $720,000 from Madoff to purchase a house, an amount he never paid back.

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