Only weeks later, in a fraud similar in design but much larger in scale, Wall Street investor Bernard Madoff revealed that he had misled investors by investing an estimated $65 billion in the largest Ponzi scheme in history. In south Florida, the Securities and Exchange Commission (SEC) filed suit against Haitian-American investor George Theodule for swindling investors from the area's Haitian community out of $23.4 million, and against Andres Pimstein, the Chilean-American owner of The Bottom Line of South Florida, Inc. and Summit Trading LLC, for an alleged $30 million Ponzi scheme.
as dozens of companies postponed or canceled plans Wall Street investor to go public. Thus far, the prospects for 2009 are even corruption Bernard Madoff revealed worse. As foreign investors reallocate capital to cover shAkeup that he had misled inves- losses in other markets and global liquidity remains tors by investing an esti- scarce, Latin American issuers have been punished. mated $65 billion in the The financial crisis has exerted substantial down- largest Ponzi scheme in ward pressure on asset prices and has curtailed issu- history. The scandal had by Danielle Renwick ance of new corporate securities in the short term. It ripple effects throughout remains to be seen whether this will cause a whole- Latin America: Spain’s sale retrenchment of the progress achieved during Protests spread through Banco Santander, one of the five years preceding the crisis. Colombia last November the largest banks in the when thousands of small region, lost an estimated Who Will investors discovered that their life savings $3.1 billion in Madoff investments. Similarly, Bounce Back? had vanished in pyramid schemes. Losses totaled Chile’s Celfin Capital SA and Peru’s largest finan- Not surprisingly, capital continues to gravitate toward nearly $1 billion, with cial-services company, growth. While there has been a substantial decelera- most concentrated Credicorp Ltd., revealed tion of overall economic growth across the region, around David Murcia they too had invested prospects in the leading economies of Latin Amer- Guzmán’s D.M.G. Grupo millions with Madoff. ica remain strong compared with the negative pro- Holding. The scandal put Similar schemes were jections in the mature markets of the United States, President Álvaro Uribe exposed elsewhere. In Europe and Asia. under fire for perceived south Florida, the Securi- Despite months of successive downward revi- loose regulation, and ties and Exchange Com- sions, consensus GDP growth estimates for Brazil, sparked riots that left at mission (SEC) filed suit Chile and Colombia remain close to 2 percent, and least two dead. against Haitian-Amer- projections for Peru still approach 5 percent. Demand Only weeks later, in a ican investor George in capital markets serves as a barometer for such fraud similar in design Theodule for swindling growth. Despite very limited global appetite for new but much larger in scale, investors from the area’s securities, Brazil and Colombia issued bonds in Janu- ary 2009 for $1 billion each, and Chile and Peru both have large issuances planned for the first quarter of this year. Quasi-sovereigns such as Codelco, Petro- bonds has been limited to those countries that have bras and Pemex have all conducted large bond issu- achieved investment-grade status, rewarding those ances this year, demonstrating further that Latin economies that were managed well in the years pre- American blue-chip debt securities are able to com- ceding the cris
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