mar 1, 1990 - Madoff Continues Increasing Market Share; Chairs Nasdaq

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He develops a solid, but sometimes controversial, reputation as a market maker. During the decade, his market-making operation was handling trades equaling 9 percent of all trading on the New York Stock Exchange. He serves as non-executive chairman of Nasdaq from 1990 to 1993 and uses the position to lobby Washington.

The controversy over "pay for order flow" continues to dog him. In 1990, the NASD forms a study committee; it releases a report in 1991 saying it found "no legal basis to restrict the practice."

But the exchanges continue to fight back. On the brink of 1993 congressional hearings, The Washington Post publishes an article "A Broker and the Angry Exchanges; Bernie Madoff's Stock Buying Rivalry Irks NYSE, Amex."

"Who is Bernie Madoff and why is he driving the,Wall Street establishment crazy?" the article begins. Madoff is quoted defending his practices: "I just don't see how anybody can make an argument against the practices of competition," he says. "People would like to apply pejorative-type terms. … I think people that use that kind of terminology are unhappy that they're losing business."

But Madoff's impressive cash-generating days are numbered. In 1997, trading spreads are slashed from 12.5 to 6.5 cents per share, and in 2001, they fall to a penny.

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