Madoff's Ponzi scam hits Wall Street

Ponzi schemes are generally associated with fly-by-night operators out to make some fast bucks duping unsuspecting lay persons with promises of high growth investments. (See: Nomura's exposure $306-million exposure in Masdoff's Ponzi)

But the latest scandal that has come to light seems to the mother of all Ponzi schemes, and what is more, the victims include savvy investment bankers, financial institutions and charities from across the world.

At the centre of the storm is veteran Wall Street money manager Bernard Madoff and his Bernard L. Madoff Investment Securities LLC. The 70-year-old Madoff, who was arrested Thursday, is a respected name in the investment community.

According to US prosecutors Madoff's Ponzi scheme that failed in the wake of the financial crisis has resulted in losses to the tune of $50 billion to investors, though analyts say the actual igure may be much lower (See: Madoff fraud losses may be below $50 billion)

Harvey Pitt, a former chairman of the Securities and Exchange Commission said that a lot of very sohisticated people have been duped.

Among the alleged victims of the gigantic fraud are  pensioners, powerful financial institutions and local charities. Some investors claim they have been completely wiped out, while many other are still calculating their losses.