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Bernie Madoff Blasts Wall Street Signing Bonuses In Letter To CNBC

Madoff Blasts Wall Street Practice In Letter From Jail
FILE - In this Dec. 17, 2008 file photo, Bernard Madoff returns to his Manhattan apartment after making a court appearance in New York. In December 2008, two of Bernard Madoff's most loyal employees met on a Manhattan street corner and fretted over a closely held secret that the rest of the world would learn about eight days later: that their boss, Madoff, was a con man for the ages. The exchange was recounted for the first time in a newly rewritten indictment this week expanding the case and charges against five defendants headed for a trial next year. The indictment brings into sharper focus the final few years of a fraud the government says dated to at least the early 1970s, two decades before Madoff claimed it began and well before 1992, when the government said in its original case against the defendants that the conspiracy began. (AP Photo/Jason DeCrow, File)
FILE - In this Dec. 17, 2008 file photo, Bernard Madoff returns to his Manhattan apartment after making a court appearance in New York. In December 2008, two of Bernard Madoff's most loyal employees met on a Manhattan street corner and fretted over a closely held secret that the rest of the world would learn about eight days later: that their boss, Madoff, was a con man for the ages. The exchange was recounted for the first time in a newly rewritten indictment this week expanding the case and charges against five defendants headed for a trial next year. The indictment brings into sharper focus the final few years of a fraud the government says dated to at least the early 1970s, two decades before Madoff claimed it began and well before 1992, when the government said in its original case against the defendants that the conspiracy began. (AP Photo/Jason DeCrow, File)

If you ask Bernie Madoff, Wall Street has a major pay problem on its hands.

In a letter to CNBC from prison, the infamous Ponzi schemer wrote that signing bonuses, which Wall Street firms use to capture top staffers, are only a symptom of a larger compensation problem in the financial industry.

“The real problem with the signing bonuses is that pressure that the new firms put on their bonus babies to generate large commissions by promoting special products of the new firm to pay off those bonus costs,” he wrote in his letter last week.

The signing bonuses proved controversial in the years following the financial crisis as brokers failed to deliver the goods after being lured to competitors with six- and seven-figure salaries, according to a 2010 Wall Street Journal report. During that year, cases of Wall Street firms going to FINRA demanding the signing bonuses back represented the largest percentage of FINRA cases in a decade.

This is the second time in as many months that Madoff, who in 2009 was sentenced to 150 years in prison for the largest Ponzi scheme in U.S. history, has waxed poetic about the financial industry to the business network from his jail cell. Madoff penned a Christmas Eve letter to CNBC in which he derided the increasingly secretive nature of financial markets.

The Financial Industry Regulatory Authority, the financial industry’s self-regulating body, is proposing a new rule that would require Wall Street brokers pulled to a new firm with a signing bonus of more than $50,000 to disclose it to clients, according to Bloomberg. The brokers would have to tell their clients how much they were paid to come to a new firm before they could try to convince them to follow.

If FINRA goes through with the signing bonus measure it would be just one of many ways Wall Street staffers may see their pay curbed this year. Wall Street bonuses will likely be the lowest in years, this year, the New York Post reported earlier this month. And banks, including Citigroup and Morgan Stanley, have announced that they’re slashing thousands of jobs.

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