Eric Swanson

Last updated

Eric Swanson
NationalityAmerican
Education
OccupationAttorney
Employer BATS Global Markets
TitleSenior Vice President, General Counsel, and Secretary
Spouse Shana Madoff
Children2

Eric J. Swanson is an American lawyer who worked at the U.S. Securities and Exchange Commission (SEC) and dated and eventually married the niece of Bernard Madoff while the SEC was investigating Madoff's investment firm for what was eventually revealed to be a massive Ponzi scheme. Swanson is currently the Senior Vice President, General Counsel, and Secretary of BATS Global Markets, the third-largest stock exchange in the United States.

Contents

Swanson worked at the Securities and Exchange Commission as a lawyer from 1996 to 2006, rising to the level of Assistant Director of the Office of Compliance Inspections and Examinations. Subsequently, he worked at Ameriprise Financial as Vice President of Regulatory Strategy.

Swanson is married to Shana Madoff, who worked at the firm of her uncle Bernard Madoff as a rules and compliance officer and attorney until it was closed when the multibillion-dollar Madoff investment scandal was uncovered. Swanson met Shana Madoff originally when he was conducting an inadequate SEC examination of whether Bernie Madoff's firm was front running customer trades from the market making unitcompletely missing the multi-billion dollar Ponzi scheme that Shana's own cousins (Bernie's sons) would expose to the SEC in December 2008.

Early life and education

Swanson, a Minneapolis, Minnesota native, graduated from the University of Minnesota (B.A.; 1990) and obtained a J.D. degree from the Hamline University School of Law (J.D.; 1993). [1] [2] [3] [4]

Securities and Exchange Commission

Following a period of time in which he practiced non-securities-related law, Swanson worked at the Securities and Exchange Commission (SEC) as a lawyer from August 1996 to 2006. [1] [5] While at the SEC, he received in August 2004 a Capital Markets Award, related to work in the area of SEC examinations of conflicts of interest. [4] At the end of his tenure, he was Assistant Director of the Office of Compliance Inspections and Examinations, and reported to the head of the SEC's inspection program, supervising 8–18 staffers. [1] [5] [6]

Madoff

Bernard Madoff BernardMadoff.jpg
Bernard Madoff

Swanson is the husband of Shana Madoff, who is daughter of Peter Madoff. She is also a niece of Bernard Madoff, who operated a Ponzi scheme that is considered to be the largest financial fraud in U.S. history. [7] [8] [9] She worked under her father at her uncle's firm, Bernard L. Madoff Investment Securities (BMIS), [8] [10] as a rules and compliance officer and attorney. [7] [11] [12] She reported to her father who was responsible for ensuring that BMIS complied with its legal and regulatory obligations, and signed documents assuring the SEC that BMIS's business records were truthful and accurate. [11] [13]

Swanson met Shana Madoff in April 2003. [7] [14] [15] The two met in 2003 at an industry event during an examination of Bernie Madoff by the SEC as to whether Bernie Madoff was front running customer orders, totally missing the multi-billion dollar Ponzi scheme that would be exposed in December 2008. The two had periodic contact thereafter in connection with Swanson speaking at industry events organized by a SIFMA committee on which Shana Madoff sat. During 2003 Swanson sent Shana's father Peter Madoff two regulatory requests, although by the time of the second request Swanson's responsibility for the examination had been transferred to a different Assistant Director at the SEC. [7] [16] [17] [18] [19] [20]

In March 2004, SEC lawyer Genevievette Walker-Lightfoot, who was reviewing Madoff's firm, raised questions to Swanson (Walker-Lightfoot's boss's supervisor) about unusual trading at a Bernie Madoff fund; Walker-Lightfoot was told to instead concentrate on an unrelated matter. [21] [22] Swanson and Walker-Lightfoot's boss asked for her research, but did not act upon it. [22]

In February 2006, Swanson was emailed by Assistant Director John Nee that the SEC's New York Regional Office was investigating a complaint that Bernard Madoff might be running "the biggest Ponzi scheme ever." [16] In April 2006, Swanson began to date Shana Madoff. Swanson reported the relationship to his supervisor who wrote in an email "I guess we won't be investigating Madoff anytime soon." [23]

In 2006, the SEC's New York Enforcement Office, of which Swanson was not a part, closed its investigation of Bernie Madoff. On 15 September 2006, Swanson left the SEC. [7] [24] On 8 December 2006, Swanson and Shana Madoff became engaged. [7] [25]

In 2009, after the scandal broke, SEC Inspector General H. David Kotz investigated, and concluded that there was no evidence that Swanson's romantic relationship with Shana Madoff influenced the closing of the SEC investigation of Madoff. [26] [27] [ failed verification ] He did conclude, however, that: "Swanson's communication with Shana during the period of time he was engaged in a cause examination of her uncle and father's firm, created the appearance of a potential conflict of interest." [23]

The September 29, 2007, wedding between Swanson and Shana Madoff was attended by Lori Richards, the SEC's Director of Compliance Investigations and Examinations, who oversaw the Division in which Swanson worked at the SEC. [15] [23] [28] [29] In 2008, Bernard Madoff spoke at a business roundtable meeting of his "very close" relationship with an SEC lawyer, and chuckled: "my niece even married one". [30] [31] In April 2009, Richards recused herself from the Madoff investigation. [28]

Ameriprise Financial

Subsequent to working at the SEC, Swanson was a Vice President of regulatory strategy at Ameriprise Financial, a financial services company based in Minnesota. [1] [2]

BATS

Swanson is the Senior Vice President, General Counsel, and Secretary of BATS Global Markets, an electronic stock exchange that is the third-largest stock exchange in the United States, which he joined as General Counsel in January 2008. [1] [32] He was hired in part to assist the exchange in its effort to obtain exchange status from the SEC. [1]

Related Research Articles

<span class="mw-page-title-main">U.S. Securities and Exchange Commission</span> Government agency overseeing stock exchanges

The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market manipulation.

<span class="mw-page-title-main">Bernie Madoff</span> American fraudster and financier (1938–2021)

Bernard Lawrence Madoff was an American financial criminal and financier who was the admitted mastermind of the largest known Ponzi scheme in history, worth an estimated $65 billion. He was at one time chairman of the Nasdaq stock exchange. Madoff's firm had two basic units: a stock brokerage and an asset management business; the Ponzi scheme was centered in the asset management business.

Andrew Madoff was an American financier, best known for exposing alongside his brother the financial crimes of his father, Bernie Madoff, whose Ponzi scheme has been widely described as the most successful in history.

Harry M. Markopolos is an American former securities industry executive and a forensic accounting and financial fraud investigator.

David G. Friehling is an American accountant who was arrested and charged in March 2009 for his role in the Madoff investment scandal. He subsequently pleaded guilty to rubber-stamping Bernard Madoff's filings with regulators rather than fully reviewing them. His role in covering up Madoff's massive Ponzi scheme makes it the largest accounting fraud in history.

Robert M. Jaffe is an American stockbroker. He was a long-time associate of Ponzi schemer Bernard Madoff and promoted Madoff's fund to wealthy investors in Massachusetts and Florida.

H. David Kotz, also known as Harold David Kotz, is a managing director at Berkeley Research Group. While Inspector General at the U.S. Securities and Exchange Commission (SEC), Kotz investigated why the SEC failed to detect the $19 billion Madoff fraud.

<span class="mw-page-title-main">Frank DiPascali</span> American fraudster (1956–2015)

Frank DiPascali Jr. was an American fraudster and financier who was a key lieutenant of Bernie Madoff for three decades. He referred to himself as the company's "director of options trading" and as "chief financial officer". For a number of years, he played a key part in the daily operation of the Madoff investment scandal, later recounting how he helped manipulate billions of dollars in account statements so clients would believe that they were creating wealth for them.

<span class="mw-page-title-main">Madoff investment scandal</span> Investment scandal discovered in 2008

The Madoff investment scandal was a major case of stock and securities fraud discovered in late 2008. In December of that year, Bernie Madoff, the former Nasdaq chairman and founder of the Wall Street firm Bernard L. Madoff Investment Securities LLC, admitted that the wealth management arm of his business was an elaborate multi-billion-dollar Ponzi scheme.

<span class="mw-page-title-main">Participants in the Madoff investment scandal</span>

Participants in the Madoff investment scandal included employees of Bernard Madoff's investment firm with specific knowledge of the Ponzi scheme, a three-person accounting firm that assembled his reports, and a network of feeder funds that invested their clients' money with Madoff while collecting significant fees. Madoff avoided most direct financial scrutiny by accepting investments only through these feeder funds, while obtaining false auditing statements for his firm. The liquidation trustee of Madoff's firm has implicated managers of the feeder funds for ignoring signs of Madoff's deception.

The recovery of funds from the Madoff investment scandal has been underway since the scandal broke in December 2008. That month, recovery trustee Irving Picard received funds from the Bank of New York account where Bernard Madoff held new investments into his Ponzi scheme. As it has been concluded that no legitimate investments were made on the investors' behalf for at least the last 12 years of operation, recovery has proceeded on a "money in/money out" basis. Investors are entitled to receive no more than the nominal cash amounts that they paid in and did not subsequently withdraw, without regard to inflation, interest, opportunity cost or the false statements that Madoff provided them. Those statements combined to a total balance of approximately $64 billion, while the admitted claims amount to $19.5 billion. As of March 2024, the trustee had recovered $14.7 billion toward these claims through legal action against Madoff associates, feeder funds and beneficiaries of the scheme, and had made fifteen distributions to investors. Action by the Department of Justice has recovered an additional $4 billion.

Genevievette Walker-Lightfoot is a former U.S. Securities and Exchange Commission (SEC) attorney. She worked on the Bernard Madoff investigation in 2004, as the Lead Investigator for the SEC on the case. She discovered key elements of the Madoff Ponzi scheme and reported them to her superiors. She was moved off the case prior to being able to complete the investigation.

<span class="mw-page-title-main">Matter Under Inquiry</span>

A Matter Under Inquiry is a term used by the United States Securities and Exchange Commission to describe preliminary investigations it makes into alleged financial fraud in the companies that it is responsible for regulating. MUIs may lead to more serious formal investigations, or they may be closed and no further action taken.

Kingate Management is a Hamilton, Bermuda hedge fund. It was a feeder fund into the securities firm of Bernie Madoff, as part of the Madoff investment scandal.

Ascot Partners is a hedge fund that was a feeder fund to Bernie Madoff.

Access International Advisors and Marketers, a Securities and Exchange Commission-registered investment advisor and a hedge fund of funds, was a research analyst investment agency that specialized in managing hedged and structured investment portfolios that involve commercial physical and biological research. It was a feeder fund into the securities firm of Bernie Madoff, as part of the Madoff investment scandal.

Shana Diane Madoff, sometimes referred to as Shana Madoff Skoller Swanson, is an American former attorney who is now a yoga teacher.

Aurelia Finance SA was a private bank and fund-management company in Geneva, Switzerland that was set up as a feeder fund to Bernie Madoff's illegal Ponzi scheme.

<i>The Wizard of Lies</i> 2017 Bernie Madoff biopic Barry Levinson

The Wizard of Lies is a 2017 American television biopic film directed by Barry Levinson and written by Sam Levinson, Sam Baum, and John Burnham Schwartz, based on the 2011 non-fiction book of the same name by Diana B. Henriques. The film stars Robert De Niro as businessman and fraudster Bernie Madoff, Michelle Pfeiffer as his wife Ruth Madoff, and Alessandro Nivola as their older son Mark Madoff. It aired on HBO on May 20, 2017. This is the fourth film featuring De Niro and Pfeiffer, following Stardust (2007), New Year's Eve (2011) and The Family (2013), as well as their first collaboration for television.

References

  1. 1 2 3 4 5 6 Telis Demos (December 18, 2008). "A stock exchange caught in the Madoff mess". CNN. Retrieved February 15, 2013.
  2. 1 2 Labaton, Stephen, "Unlikely Player Pulled Into Madoff Swirl", December 18, 2008, New York Times
  3. Slater, Dan (December 17, 2008). "SEC to Probe Relationship Between Madoff's Niece and Ex-SEC Lawyer". Wall Street Journal. Retrieved February 15, 2013.
  4. 1 2 "Eric J. Swanson resume" (PDF). SEC. Retrieved February 15, 2013.
  5. 1 2 David Kotz, H. (2009). Investigation of Failure of the SEC to Uncover Bernard Madoff's Ponzi Scheme ... ISBN   978-1-4379-2186-1 . Retrieved February 19, 2013.
  6. "S.E.C. Says It Missed Signals on Madoff Fraud Case", Alex Berenson and Diana B. Henriques, December 16, 2008, New York Times
  7. 1 2 3 4 5 6 Investigation of Failure of the SEC to Uncover Bernard Madoff's Ponzi Scheme. Diane Publishing. 2010. ISBN   978-1-4379-2186-1 . Retrieved February 14, 2013.
  8. 1 2 Jerry Oppenheimer (2009). Madoff with the Money. John Wiley & Sons. ISBN   978-0-470-57281-8 . Retrieved February 14, 2013.
  9. Peter J. Sander (2009). Madoff: Corruption, Deceit, and the Making of the World's Most Notorious Ponzi Scheme. Lyons Press. ISBN   978-1-59921-811-3 . Retrieved February 14, 2013.
  10. Erin Arvedlund (2009). Too Good to Be True: The Rise and Fall of Bernie Madoff. Penguin. ISBN   978-1-101-13778-9 . Retrieved February 14, 2013.
  11. 1 2 Allan Dodds Frank (July 2, 2012). "The Madoff saga is far from over". Fortune. Archived from the original on July 27, 2013. Retrieved February 15, 2013.
  12. O. C. Ferrell; John Fraedrich; Linda Ferrell; Ferrell (2012). Business Ethics: Ethical Decision Making & Cases. Cengage Learning. ISBN   978-1-111-82516-4 . Retrieved February 14, 2013.
  13. Grant McCool; Gerald E. McCormick; Carol Bishopric (October 3, 2009). "Trustee sues Madoffs who helped run firm". Reuters. Archived from the original on March 6, 2016. Retrieved February 14, 2013.
  14. Williamson, Elizabeth (December 22, 2008). "Shana Madoff's Ties to Uncle Probed". Wall Street Journal. Retrieved February 15, 2013.
  15. 1 2 Nigel Da Costa Lewis (2012). The Fundamental Rules of Risk Management. CRC Press. ISBN   978-1-4398-1618-9 . Retrieved February 14, 2013.
  16. 1 2 U.S. SEC Office of Investigations (August 31, 2009). "Investigation of Failure of the SEC to uncover Bernard Madoff's Ponzi Scheme (Public Version); B. Swanson's Initial Contact with Shana Madoff for SEC Office of Investigations Investigation of the SEC to Uncover Madoff Ponzi Scheme" . Retrieved February 15, 2013.
  17. "E-Mails Reveal Internal Drama at SEC Over Maddoff Firm". Fox Business. March 4, 2006. Retrieved February 15, 2013.
  18. Deborah Hart Strober; Gerald Strober; Gerald S. Strober (2009). Catastrophe: The Story of Bernard L. Madoff, the Man Who Swindled the World. Phoenix Books, Inc. ISBN   978-1-59777-640-0 . Retrieved February 14, 2013.
  19. Alexander Davidson (2010). How the Global Financial Markets Really Work: The Definitive Guide to Understanding International Investment and Money Flows . Kogan Page Publisher. p.  118. ISBN   978-0-7494-5393-0 . Retrieved February 14, 2013.
  20. Charles Gasparino (December 15, 2008). "Madoff Victims Claim Conflict of Interest at SEC". CNBC. Archived from the original on December 16, 2013. Retrieved February 15, 2013.
  21. Zachary A. Goldfarb (July 2, 2009). "SEC Investigator Raised Madoff Concerns Years Ago, Was Asked to Look Elsewhere". Washington Post. Retrieved February 15, 2013.
  22. 1 2 Pressler, Jessica (July 2, 2009). "SEC Lawyer Raised Questions About Madoff Back in 2004". New York Magazine. Retrieved February 15, 2013.
  23. 1 2 3 Al Lewis (September 12, 2009). "True love can never be regulated". The Denver Post. Retrieved February 19, 2013.
  24. Sandler, Linda (December 22, 2008). "Facebook Removes Madoff Web Page After Jeers, Cheers". Bloomberg. Retrieved February 15, 2013.
  25. "Unlikely Player Pulled Into Madoff Swirl", by Stephen Labaton, December 18, 2008, The New York Times
  26. Danny Schechter (2010). The Crime of Our Time: Why Wall Street Is Not Too Big to Jail. ISBN   978-1-934708-62-0 . Retrieved February 14, 2013.
  27. "Report Details How Madoff's Web Ensnared S.E.C.", by David Stout, September 2, 2009, The New York Times
  28. 1 2 Laura Strickler (April 6, 2009). "SEC Compliance Official Recused on Madoff". CBS News. Retrieved February 19, 2013.
  29. Clifford J. Alexander; Arthur C. Delibert; Catherine S. Bardsley (1994). Money Manager's Compliance Guide. Thompson Publishing Group. Retrieved February 14, 2013.
  30. Brian Ross; Joseph Rhee (December 16, 2008). "SEC Official Married into Madoff Family". ABC News. Retrieved February 26, 2013.
  31. Jerry Oppenheimer (2009). Madoff with the Money. John Wiley & Sons. ISBN   978-0-470-50498-7 . Retrieved February 26, 2013.
  32. "BATS Exchange | Management Team". BATS Trading. Retrieved February 15, 2013.