As everyone in the industry must know by now Bernard Madoff, founder of Bernard Madoff Investment Securities has been arrested for fraud. He allegedly admitted that his firm is just a giant Ponzi scheme---one that lost $50 billion in investors money.

It’s ironic that it says this on the firm’s Web site, “In an era of faceless organizations owned by other equally faceless organizations, Bernard L. Madoff Investment Securities LLC harks back to an earlier era in the financial world: The owner's name is on the door. Clients know that Bernard Madoff has a personal interest in maintaining the unblemished record of value, fair-dealing, and high ethical standards that has always been the firm's hallmark.”

Unbelievable. Another Wall Street icon accused of fraud, kicking the business one more time while it is down. That’s just what this business and the economy needs right now.

What infuriates me about the Madoff story --and heck, like most people in the industry, I have interviewed Bernie and talked with his son Mark, who is on Wall Street & Technology’s Reader Advisory Board----is that even as his “giant Ponzi scheme” is about to collapse, he rushes to use what money is left to pay his friends and family. If all this is true, the guy obviously has no conscience. What about all those investors who are out billions of dollars? He still felt no remorse about duping them out of billions of dollars?

Apparently the investment advisory business was achieving fantastic returns, even this year while everyone else’s funds were taking a nosedive. I guess that should have sounded an alarm to investors. In a New York Times Article, one investor said the consistently positive returns are the reason he did not invest, which is an interesting approach, but I guess also a smart one in this case.

It will be very interesting to see this story unfold. I wonder how sound the market making business is? And I’m sure the market is wondering who knew about this at the firm and how far back the fraud goes. It’s another sad day for Wall Street. If you can’t trust the owner who hangs his name on the door, who can you trust?