Bernie Madoff and Me

It's been almost a year and half since Bernard L. Madoff Investment Securities, LLC (BMIS) and I parted company. It was no great loss for me except that I was unemployed, but the tragedy and irony of what has transpired since really caught me by surprise; and for the long-time employees of BMIS I left behind it must've been downright traumatic. Why has Eleanor Squillari, Bernie's secretary of 25 years, come forward now? I believe she's doing it as a form of "post-traumatic stress " therapy. Yes, she probably is writing a book, but that only helps her make sense of what her life has been caught up in by this crime.

For my part I've been trying to reconcile my role at the firm, Business Analyst and Project Manager, with the technology I saw there and, what I call, the dysfunction of managing it. From the outset few people were told what my role was to be and why the head of technology, the late Liz Weintraub, hired me. And although she passed away shortly after I joined the firm, the two people she recommended to replace her, never had a full picture as to my role. They viewed me as an outsider to their "unique" world. And unique it was.

Although the trading technology I saw was sophisticated, it was also somewhat dated by 2007 standards. BMIS used Stratus Technology - super computers - for their trading engine and had the software developed and supported for this in-house; a quintessential Rolls-Royce when a Smart Car is required. Yes, this was the model for robust and sophisticated trading 20 or more years ago, but with today's off-the-shelf, plug-n-play technology you simply don't require the added expense of "owning" the IT to the extent Madoff did. Expanding into additional asset-classes for example required "reprogramming", table structure expansion, directory changes, and other issues I had not contended with since the 1980's.

And this is not an indictment of the people managing the Stratus Systems. These people were doing Homeric work, but seemed more and more pushed to the wall to hold the systems together as newer requirements were pushed down to them from Madoff Trading. I was always wondering and trying to inquire as to "Why". How come these legacy systems weren't "sunset" and newer technologies implemented so Madoff could grow his business faster? Not only was Madoff competing with other B/D institutions, but in a real way they were also competing with technology providers. If you're ABC broker-dealer "employing technology" and not "building technology", you're better positioned to begin trading a new asset class or instrument a whole lot quicker; you're just buying what you need off the shelf and implementing it.

In hindsight it becomes very apparent. Madoff couldn't upgrade to other technology platforms because he would have to invite other IT technologists in to assist with the upgrade. This would entail an assessment of not only the Stratus Trading Engine, but a system Madoff kept on the 17th floor - an IBM A/S 400. In today's world, trading engines and reporting systems can reside together - makes things easier given today's data-base and data-modeling technologies. But in Bernie's World, these were separated; and to Bernie, for good reason. The A/S 400 was Bernie's printing press for statement generation and he couldn't risk the information being stored on that system being seen by other, more knowledgeable, technologists. If the A/S 400 had "statement records" on it, but no individual trading data, questions would have been raised and the charade found out.

In retrospect I met some very, very smart people at Madoff. Several IT developers there deserve to be product, program and division managers within the financial services and trading industries; these people were wonderful to work with and should not be held to some foolish myopia about "having worked at Madoff" - Bulls--t!

Most recently though I was reminded, in very stark terms, of just how insidious and evil this whole affair actually is. I was interviewed for a BBC production regarding my experiences with Madoff and only just realized yesterday, 5/11, that my British interviewer was the son of a man who killed himself as a result of losing his retirement funds to Madoff. His father was a professional British Soldier, an Officer, a Gentleman. Words cannot express what needs to be.