18 Dec 2008

Madoff under curfew after posting $US10m bail

4:05 pm on 18 December 2008

Bernard Madoff, the hedge fund boss accused of a $US50 billion fraud, has put up $US10 million bail and has in effect been placed under house arrest.

US authorities have ordered Mr Madoff to turn over all records related to money he managed, as officials continue to investigate how he ran the pyramid scheme.

Investors, banks and charities across the world fear they may have lost billions of dollars since his arrest last week.

Mr Madoff turned up at New York's federal court to sign some papers on Wednesday but did not answer reporters' questions, the BBC reports.

He signed over his New York flat and his homes in Long Island and Palm Beach, Florida, to make up the bail.

He will also be fitted with an electronic tag and will have to seek permission to leave his flat.

In addition to surrendering his own passport, Mr Madoff has also agreed to hand in that of his wife Ruth.

The bail conditions were tightened after Mr Madoff failed to find the required four people to co-sign his bail agreement.

If the correct documents are supplied, Mr Madoff will not have to make another court appearance until 12 January.

Securities regulators say they want Mr Madoff's New York-based firms to supply them with the names and addresses of all Massachusetts-based investors and any notes, emails, meeting agendas and telephone records that relate to investments made on their behalf from 2000.

While the fallout is touching wealthy investors, banks and investment advisers around the world, the impact is especially deeply felt in Massachusetts, where Mr Madoff made many connections with wealthy investors.

Also on Wednesday, US Attorney General Michael Mukasey removed himself from the investigation. It was announced by the Justice Department, which declined to discuss the reasons for the decision.

SEC begins internal review

Questions are now being asked about how US financial regulators failed to detect the alleged fraud.

The Securities and Exchange Commission has ordered an in-house investigation into why it did not detect the alleged Madoff fraud case sooner.

It has been revealed that the commission received specific warnings about Mr Madoff 10 years ago.

SEC chairman Christopher Cox says he is "gravely concerned by the apparent multiple failures" of commission staff to look into claims about Mr Madoff.

The commission has been criticised for not uncovering the scandal until senior employees of Mr Madoff went to authorities last week.

The president of the Securities Investor Protection Corporation, Stephen Harbeck, says he does not have any good news for worried investors.

"The stories we hear from people who call my office ... are absolutely heartbreaking." he says.

"There are people who entrusted all of their financial assets to this brokerage firm and they cannot have access to them immediately. I wish I had better news."