Madoff Prison Letter Rails Against Insider Trading, Lack of Financial Transparency >>Hollywood

Bernie Madoff is not surprised. Or impressed.

In a Christmas Eve letter from the medium security federal prison where he is serving a 150-year sentence, Madoff tells CNBC that insider trading has been around "forever."

He also rails against what he calls a lack of transparency in the financial markets, and says the growth of hedge funds is forcing market players to take outsized risks.

You know, in case you wanted his opinion.

Convicted Ponzi scheme artist Madoff has granted only a handful of interviews since he went to prison in 2009 following a shocking and epic downfall.

More recently, he has declined to speak on the record about his case. But he was willing to share some views about U.S. financial markets via e-mail.

Before confessing four years ago this month to the largest investment scam in U.S. history, Madoff was prominent in the financial community. He served as a non-executive chairman of the NASDAQ, and his firm was once among the largest market makers on Wall Street.

"(O)ne would be led to believe that with the recent spate of insider trading prosecution that insider trading is a new development," Madoff writes. "This is false. It has been present in the market forever, but rarely prosecuted. The same can be said of front running of orders."

Front running refers to the illegal practice of brokers using knowledge of their customers' pending orders to trade for their own accounts first.

Madoff says markets are suffering from what he calls a "lack of transparency" created by the growth of so-called "dark pools"-arrangements outside the established stock exchanges that allow parties to trade stocks privately, with trades and prices only disclosed after the fact.

"Institutions have always attempted to guard this buy and sell information from exposure to the market for fear of being front run," Madoff writes. "Certainly they are entitled to have this right of confidentiality. That being said, the more secret this information, the more valuable this information is to those that can obtain it. Therein lies the problem. It is nave to think that there will be no leakage of this information."

Madoff built his fraud on one of the largest hedge funds on Wall Street, which attracted investments from individuals as well as a series of so-called "feeder funds." But Madoff now says the rapid growth of hedge funds and feeder funds-and their commissions and fees-have created a problem for investors and regulators.

"It has been this additional layer of costs that have created the need for more risk to be taken to earn worthwhile returns. This has created a minefield of regulatory problems involving the very reasons that the desire for a lack of transparenc