Generally, trade reports are generated from you know, trades. Typically, for the reason of the article, these systems don't allow the users to generate reports even for testing purposes. Rather, they would submit a trade in a test stock such as ZVZZT or ZXZZT. These would generate a trade, which would show on the reports, but not have any clearing associated with them. While it is possible to "dummy" in trade reports, even a rudimentary glance at the corresponding blotter would throw up red flags as there would be no clearing associated with the trades, and they would have no presence on the tape. I know the auditors were crooked, but this is an aspect of the scam that the SEC should have been all over. A system which would make it appear as if there was clearing (at least on the paper that Madoff was generating) without that clearing actually being there is something that should shout "FRAUD" to anyone involved in the project.