Madoff $50 Billion Ponzi Scheme

(CSM) With confidence already shaky, sophisticated investors ranging from suave Spanish bankers to Palm Beach retirees have lost billions of dollars in what is one of the biggest scandal to ever rock the investment world.Law enforcement officials are still trying to figure out what happened to some $50 billion run by Bernard Madoff, who was arrested last week. It appears he was operating an old-fashioned Ponzi scheme, one of those arrangements where new investors finance returns to the old investors. But no matter what investigators turn up, the scandal represents another cloud over Wall Street and its watchdog agency, the Securities and Exchange Commission."The main impact from a systemic point of view is that it undermines the already fragile levels of confidence," says Peyton Young, a senior fellow at the Brookings Institution in Washington.

Meanwhile a federal judge  signed an order saying investors who may have been victims need the protection of the Securities Investor Protection Act.Judge Louis Stanton also directed that proceedings to liquidate the assets of Bernard L. Madoff Investment Securities LLC be moved to bankruptcy court.

Scott Drake discusses the case with Peter Cohan

Peter's new book "You Can't Order Change"

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