Banks Must Watch Out For Fraud Revelations Amid Pandemic

Amanda Kramer and Gerald Hodgkins were quoted in Law360 regarding the potential fraud schemes that may be exposed  during the COVID-19 pandemic. Ms. Kramer says, “Ponzi schemes are often discovered when investors seek to redeem their investments and learn that the money's not there. As we saw in the wake of the 2008 financial crisis, a loss of confidence in the stock market often causes investors to ask for their money back with much greater frequency than when the market is doing well.”

Mr. Hodgkins added that regulators responded to the Madoff scandal by writing new rules around investment advisers’ custody practices and taking other steps to enhance fraud detection and prevention. “That hopefully will lessen the possibility of another major Madoff-type Ponzi scheme,” Hodgkins said.