The discussion was very interesting and informative. Mr. Coffee, you referred to Mr. Madoff's accountants as a "fly-by-night firm." What did you mean by that and what did you base your opinion on?
John Coffee responds:
According to press reports, the accounting firm that audited Madoff Investment Securities (Frishling & Horowitz) had only three practitioners and a small office (13 feet by 18 feet) on a strip mall location in New City, Rockland County [N.Y.].
Most major financial firms use a premier accounting firm that is registered with the Public Company Accounting Oversight Board. It has also been reported that this firm did not participate in New York State's "peer review" program for auditing firms. It would be premature to say more about this firm, as the investigation continues, but it is unknown to the investment community. Usually investment firms want to associate with a major "Big Four" auditor to assure their investors.