Roundtable Discussion With Bernard Madoff — Transcript

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1. 0:04you know in today's regulatory
2. 0:05environment it's virtually impossible to
3. 0:09to violate rules and this is something
4. 0:11that the public really doesn't
5. 0:13understand and you if you read things in
6. 0:14the newspaper and you see somebody you
7. 0:16know violate a rule you say well you
8. 0:18know they're always doing this but you
9. 0:21it's impossible for you to go under for
10. 0:23a violation to go undetected certainly
11. 0:26not for a considerable period of time uh
12. 0:29and when you consider the volumes of
13. 0:31trading the trillions of of dollars of
14. 0:34trading that go on uh I mean our firm
15. 0:37for example loan we trade in excess of
16. 0:39$1 trillion doll a year so and that's
17. 0:41one firm you know so you can you when
18. 0:44you look at the scope of the trading uh
19. 0:47that goes on today in Wall Street and
20. 0:49you look at the what we would consider
21. 0:51to be the infractions uh they're
22. 0:53relatively small you know primarily
23. 0:56because you know of all the regulation
24. 0:58and most firms do try to comply with
25. 0:59with that so we we we determined that
26. 1:03the best thing for us for us to do was
27. 1:05basically to take the human being out of
28. 1:08the equation now that had two advantages
29. 1:10in our industry number one when you take
30. 1:12the human being out of the equation you
31. 1:14solve your regulatory problems because
32. 1:17the the the the the nature of any human
33. 1:20being certainly anyone on Wall Street is
34. 1:24you know the better deal you give the
35. 1:25customer the worse deal it is for you
36. 1:28because you're on the other side of the
37. 1:29transaction it's like it's like going
38. 1:31into any any store you know this the
39. 1:33store sells you television at a higher
40. 1:35price they're going to make more money
41. 1:37they sell you to lower price their
42. 1:39profit you know goes down accordingly so
43. 1:42the you know as honest as you can find
44. 1:45you you try and get people to to to be
45. 1:48there's this this this normal natural
46. 1:51pole you know that you have to deal with
47. 1:54so by by taking the human being out of
48. 1:56the equation to a great extent and
49. 1:58turning it over to a computer to make
50. 2:00the decision uh I guess you could you
51. 2:03could also program the computer to
52. 2:05violate a regulation but we haven't
53. 2:08gotten there yet you know the issue is
54. 2:12is by taking the human being out of the
55. 2:13factor and putting someone like Josh to
56. 2:16go back and and run all sorts of
57. 2:18algorithms and hope be can explain that
58. 2:20to you because every time he tries to
59. 2:22explain it to anyone of in the made off
60. 2:25family we you know we walk out of the
61. 2:27room after 15 minutes uh but that by
62. 2:30doing maybe we don't want them to do
63. 2:31that exactly by by doing that we were
64. 2:35able to automate the process and where
65. 2:38today just give you an example the scope
66. 2:39of that we were able to take a an
67. 2:43operation that that had uh Publican
68. 2:46asked me for a raise after this where we
69. 2:49had let's say uh 40 people you know
70. 2:53doing 300,000 transactions a day which
71. 2:56is what our our normal transaction count
72. 2:59would be uh we have a team headed by
73. 3:03Josh and what five people six people yes
74. 3:06seven I guess okay seven people you know
75. 3:09handling that same thing that that 50
76. 3:12people you know might might have been
77. 3:14involved in and and that's this is uh
78. 3:18what all Market making firms you know do
79. 3:21today that's the way they operate well
80. 3:24so I'm going to ask this of both of you
81. 3:25but I'm going to start with Mickey so
82. 3:26this is great we've gotten rid of all
83. 3:28these irrational flawed error prone
84. 3:31corrupt people potentially so
85. 3:36um