market folly

If you want the 'straight from the horses mouth' exclusive story regarding Bernie Madoff's $65 billion Ponzi scheme, you'd have to go to Bernie himself. However, there is still a next best alternative that is an insider account of its own. Harry Markopolos' book No One Would Listen: A True Financial Thriller details how he and his team discovered what Madoff was up to long before Madoff's ultimate demise. The problem (obviously enough) was that nobody listened.

The crazy part about this whole scenario is that Markopolos and company had very critical evidence as early as 2000. His "Fox Hounds" team sniffed out the rat and yet the SEC seemed to completely miss the warning signs raised. Undoubtedly the best part of the book is the viewpoint from which it is told. Markopolos saw both Madoff's scam and the SEC's failure, so this chronicle is as direct as it gets.

No One Would Listen's foreword includes a segment written by David Einhorn of hedge fund Greenlight Capital (someone we cover frequently here on Market Folly). He writes that, "Harry Markopolos is a hero... The silver lining in the Madoff collapse, if there could be such a thing, is that for at least one moment in time, the SEC has been exposed. And for his role in making that happen, Harry Markopolos deserves all our thanks."

Markopolos is the definition of a whistleblower and we can only hope others like him exude comparable sleuthing skills within the regulatory bodies. His book helps expose just how vulnerable investors are when things go wrong as the regulatory bodies seemingly have done a poor job of shielding them.

While the storyline itself is telegraphed, there's something about the book that keeps pulling you in. Despite the fact that the book covers a timeline of almost a decade, it flows flawlessly and feels as if you are living it in real-time, unraveling the case alongside Markopolos. You know exactly how the story ends, yet you still want to read every detail. And No One Would Listen's timeline all starts with the intriguing chronicle of how Markopolos deciphered that Madoff's returns were unfeasible in the first place.

While this admittedly is not the best way to describe it, think of the book almost as a movie filled with flashbacks where you re-live past events through the protagonist's eyes. Roughly speaking, half of the book focuses on the recent fall of Madoff while the other half centers on Markopolos' rising conquest and the appalling ignorance on the part of the SEC.

The writing style is generally impressive, however there are a few cliché-laden segments. In the end, you'll finish No One Would Listen impressed with Markopolos' conviction & perseverance and absolutely flabbergasted with the SEC's (lack of) actions. It's definitely a thrilling tale.

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For more insightful books on markets and investing, be sure to check out our other recent book reviews including Scott Patterson's The Quants and Jon Markman's annotated edition of Reminiscences of a Stock Operator. Additionally, we've assembled quite the compendium of recommended reading lists.