AFP

New York, Dec 12: A Wall Street advisor and former chairman of the Nasdaq stock market was arrested on Thursday for fraud after allegedly admitting to running a "giant" pyramid scheme, prosecutors announced.

Bernard Madoff, 70, faces a maximum 20 years prison and a fine of up to five million dollars if convicted on the securities fraud charge, prosecutor Lev Dassin and the FBI said in a statement.

According to the statement, Madoff on Wednesday told his employees at Bernard L. Madoff Investment Securities LLC, a securities broker, that an investor advisory business he had been running in parallel was fraudulent.

Madoff filed with the Securities and Exchange Commission on January 7 that his investor advisory business served 11 to 25 clients with about $17bn dollars in assets under management.

But Madoff allegedly told his employees that he was "finished," that he had "absolutely nothing" after losing approximately $50bn.

According to the prosecutor's statement, he said he had run "a giant Ponzi scheme" -- essentially a pyramid scam.

He told the employees he would surrender himself to the authorities after using his remaining 200-300 million dollars to pay selected employees and family and friends, the statement said.