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Arkin Kaplan

Bob Jaffe Ordered To Testify

Bob Jaffe, Ruth Shapiro, Ellen Jaffe, and Carl ShapiroThe State of Massachusetts took an early lead in aggressively pursuing another of the "feeder funds" that deposited investment monies with Bernie Madoff's fraudulent scheme. This feeder fund apparently was run through an entity known as Cohmad Securities, a FINRA-licensed broker-dealer, which was jointly owned by Maurice "Sonny" Cohn and Bernie Madoff. Cohmad Securities apparently operated out of the same office space as Bernie Madoff's primary firm and paid rent to Madoff's broker-dealer operation.

Mark and Andrew Madoff claim not to have known anything about their father's alleged fraud. "Mark and Andrew Madoff are economically and emotionally devastated by what their father has done, which among others things has destroyed the valuable market-making and proprietary trading businesses they spent 20 years building," their attorney, Martin Flumenbaum of Paul, Weiss, Rifkind, Wharton & Garrison, said in a statement. However, on their 19th trading floor, they had to be aware that some employees of Cohmad Securities were working just a few feet away.

According to one news report, the pair of Madoff sons knew Cohmad only as a retail brokerage operation through which they would occasionally place trades to the floor of the New York Stock Exchange because the firm was not a NYSE member. While Mark and Andrew knew Cohmad was one of their father's ventures, "if they had a role with asset management it was not anything they knew about," the spokesman said.

Given how Bernard Madoff Investment Securities was very much a family-run business, many have been very skeptical about this explanation. Hence, both aggrieved investors and regulators have wanted to get a better explanation of just what business Cohmad Securities conducted, how it reimbursed individuals who referred business for investment in Bernie Madoff's asset management operation and what exactly its principals knew about Madoff's investment operation.

Robert M. Jaffe is/was both a broker with Cohmad Securities and the son-in-law of Carl Shapiro, the Boston philanthropist who allegedly lost $545 million that was invested with Bernie Madoff. As Toomre Capital Markets LLC ("TCM") wrote about in the post Bob Jaffe, Bernie Madoff's Man To See, Ducks Subpoena, Mr. Jaffe thus far has missed two schedule appearances to appear before Massachusetts state security regulators. The original subpoena for his appearance and that of the Cohmad Securities' chief compliance officer, Marcia Beth Cohn, were issued shortly after Mr. Madoff's arrest. Neither has yet given any testimony that might assist prosecutors, regulators and investigators further understand who else might have been involved in Bernie Madoff's fraudulent activity.