WASHINGTON — The investment fund run by disgraced money manager Bernard Madoff may not have made even a single trade, a new twist in the scandal around an alleged $50-billion fraud that has engulfed thousands of investors and financial institutions worldwide.
The securities and brokerage industry's self-policing organization, the Financial Industry Regulatory Authority, confirmed that there was no evidence of Madoff's secretive investment fund executing trades through his brokerage operation.
And Fidelity Investments, which had a money-market fund listed among the many trades included in statements Madoff's fund sent to customers, says Madoff was not a client.
Madoff, long a prominent Wall Street figure and former chairman of the Nasdaq Stock Market, has become a global villain since he confessed last month to stealing $50-billion in what may be the largest Ponzi scheme in history.
The scandal also has cast a harsh light on regulators. The Securities and Exchange Commission failed to detect the scheme despite credible allegations against Madoff's operations being brought to the agency's staff over the course of a decade.
The industry's self-policing organization, known as FINRA, made periodic examinations of Madoff's brokerage operation, which functioned as a wholesale platform for trading by big securities firms and investment banks.
Mary Schapiro, the chief executive of FINRA, is President-elect Obama's nominee to become the new chairman of the SEC. She said in her Senate confirmation hearing Thursday that because the alleged fraud was carried out through Madoff's investment business, and FINRA was empowered to inspect only the brokerage operation, it wasn't possible for the organization to discover the violations.