SEC sues Cohmad Securities that assisted Madoff in a Ponzi scheme

The Securities and Exchange Commission filed civil charges against a brokerage firm called Cohmad Securities and a Hollywood investment adviser accusing them of advising investors to place their funds into the massive Ponzi scheme organized by Bernard Madoff. The Securities and Exchange Commission announced the civil fraud charges on Monday against Cohmad’s chairman Maurice Cohn, chief operating officer Marcia Cohn and broker Robert Jaffe. In a separate lawsuit the regulator charged Stanley Chais, known for handling investments for Hollywood's elite including director Steven Spielberg.

In the filing the SEC said Cohmad and its top officers deceived investors who funneled billions of dollars into Madoff's money management business by portraying Madoff as virtually off-limits to new investors. In another filing the SEC stated that Chais oversaw three funds that invested all of their assets with Madoff, ignoring red flags that Madoff's returns were false.

"Madoff cultivated an air of exclusivity by pretending that he was too successful to trouble himself with marketing to new investors," said Robert Khuzami, director of the SEC's enforcement division. "In fact, he needed a constant inflow of funds to sustain his fraud, and used his secret control of Cohmad to obtain them."

It should be reminded that Cohmad Securities was partially owned by Madoff and his brother, Peter. Cohmad is a contraction of the names "Cohn" and "Madoff.