If all of a sudden we found out that Vanguard or Fidelity was a Ponzi scheme, do I lose my $$$ invested?

I have different funds with them. What if they pull a Bernie Madoff. What is they folded for some unknown reason? Criminal or not.

Even if they are a ponzi scheme (I am not convinced they are as fear doesn't make it so) it doesn't mean that you will have lost your money.

You will only lose your money if the ponzi falls in upon itself, or in other words if you are the last of the bunch to come along and invest in them and fewer or no investors follow after you. If it is a ponzi those who invest first are paid by those who invest later, and then those who invest later are paid by those who follow after them, and so on and so on till the ponzi is no longer supported by those who are following after.

Bernard Madoff didn't rob all of his investors. Some of them made some very good money, but the ones who came after and who were left hold the empty bag those are the one's who suffered. Those who took their "promised" gains and left at some point rather than re-invest made their promised gains.

Good luck on recovering your money, but keep in mind that fear often times creates its own reality. The stock market crash of the 20's was largely based on fear which in turn caused people to want to get out before it was too late, which in turn caused the prices of stocks to plummit. Fear causes recessions and then in turn depressions.

Anything that promises high returns by nature of the promise is a risky venture. However, sometimes those promises return the high yield before they fall in upon themselves. I am citing reference below for a HYIP (High Yield Investment Program) tracking site that my wife seems to have had some good success with. She is following after some of these HYIPs and some of them are true ponzies, but there are people that seem to make a living by navagating them.

Oh, by the way. Did you know that the U.S social security system is a ponzi? It is the largest poniz of all time. By investing money in it you have the promise of a fixed return when you retire. Your invested money is used to pay off those who are currently recieving the benefits of having paid earlier, and one day you will be receiving the payments made by those who follow after. There are many who believe that the social security system will fall in upon itself as there will be less to "invest" in it later (population decrease or something).

Hope this helps.

yes you would lose your investment but it also depends when you invest or get back your profits
If it was a ponzi scheme then like if your the first investor then like if you get back your profits then like your in the clear but if you are a late investor you would be one of the biggest losers or someone that is still investing there too

What happens, and will happen with Madoff investors, it that a receiver will liquidate all the assets of the company and those funds will then be distributed to the investors based on a decision by a judge. As I understand Madoff's case that will be little or nothing.

You would probably be covered by SIPC and you would be entitled to a refund of taxes from the IRS on taxes you paid on the fictitious gains.

Yes and unfortunately it can't be avoid, however you can report these scammer to FBI online
http://www.ic3.gov/complaint/default.aspx

No, you are protected by SIPC.

I don't think SIPC would cover your loses since SIPC is a broker/dealer insurance. SIPC only covers loses up to $500,000 caused by fraud or loss caused by the handling of securities or bankruptcy by the broker/dealer so it only guarantees the transfer of the value of the securities that were purchased through the brokerage.

This is why it is assumed that the SIPC insurance will not cover the fraud by Madoff since he was an independent fund manager separate from the Madoff brokerage firm. However, all other investors who purchased securities from the Madoff brokerage firm should be covered by SIPC. It appears that the only hope for investors who dealt directly with Madoff is that they may be able to recover some money from the assets of the brokerage firm and fund after bankruptcy.

If you put money into a Ponzi Scheme, you ALREADY lost the money. Finding out has no effect on that.

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