SEC Charges Firm, 4 People With Fraud

A broker-dealer company along with four individuals, who helped funnel billons of dollars to disgraced money manager Bernard Madoff, has been charged with fraud.

The Securities and Exchange Commission announced the civil charges Monday. Federal regulators accuse Cohmad Securities chairman, Maurice Cohn, chief operating officer Marcia Cohn, broker Robert Jaffe and a California-based investment adviser, Stanley Chais, of turning a blind eye to "suspicious practices that clearly indicated" Madoff was scamming investors using a money pyramid scheme.

Madoff helped set up Cohmad Securities, which was a mysterious side company that Robert Khuzami Director of the SEC's Division of Enforcement said Madoff needed to maintain a "constant in-flow" of cash "to sustain his fraud." As a result, Cohmad brought in more than 800 accounts worth billions of dollars.

The SEC also alleges that Jaffe received "outsized returns" to his personal accounts which he knew or should have been were fictitious.



Watch CBSN Live

Watch CBS News anytime, anywhere with the new 24/7 digital news network. Stream CBSN live or on demand for FREE on your TV, computer, tablet, or smartphone.

Watch Now

New Android App

For your Android phone and tablet, download the FREE redesigned app, featuring CBSN, live 24/7 news.