Page last updated at 04:59 GMT, Thursday, 18 December 2008

Madoff under curfew on $10m bail

Bernard L Madoff walking down Lexington Ave
Mr Madoff did not respond to reporters' questions

Bernard Madoff, the hedge fund boss accused of a $50bn (32bn) fraud, has put up $10m bail and in effect been placed under house arrest.

Mr Madoff turned up at New York's federal court to sign some papers but did not answer reporters' questions.

He signed over his New York flat and his homes in Long Island and Palm Beach, Florida to make up the bail.

He will also be fitted with an electronic tag and will have to seek permission to leave his flat.

In addition to surrendering his own passport, Mr Madoff has also agreed to hand in that of his wife Ruth.

The bail conditions were tightened after Mr Madoff failed to find the required four people to co-sign his bail agreement.

If the correct documents are supplied, Mr Madoff will not have to make another court appearance until 12 January.

Attorney withdraws

Also on Wednesday, US Attorney General Michael Mukasey removed himself from the investigation.

It was announced by the Justice Department, which declined to discuss the reasons for the decision.

Mr Mukasey's son, Marc, has said that he represents a senior official at Mr Madoff's firm, Frank DiPascali.

"I represent Mr DiPascali, for the record, we are trying to sift through the facts like everybody else," he said.

The head of the Securities and Exchange Commission - the top US financial regulator - has said there was no evidence that the staff had acted wrongly in failing to pursue suggestions that Mr Madoff was engaged in fraudulent activity.

"I want to emphasize that there is no evidence that anyone is aware of at this point that any personnel did anything wrong," Christopher Cox said.

'Veil of secrecy'

Meanwhile, Harvey Pitt, a former SEC chairman said it would not be enough to impose greater regulation on hedge funds for its own sake.

"What is really critical is that the veil of secrecy that covers a lot of these hedge funds be removed," he told the BBC's World Tonight programme.

He added that there has to be, "an effort to understand what effect they are having in the marketplace, what their conduct and activities are like, and whether they raise significant issues for the regulators".

In response to questions about how regulators should realise when fraud is happening, he said it is not always as obvious as it seems with hindsight.

"People intent on defrauding others have a very high likelihood that they won't get caught for a fairly long period of time," Mr Pitt said.

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