In an email posted by CNBC and dated Dec. 24, Madoff, who is serving a 150-year sentence, noted insider trading "has been present in the market forever, but rarely been prosecuted."
Madoff's remarks were made in reference to the recent crackdown on insider trading that suggests the practice is new, the Los Angeles Time reported Wednesday.
"The same can be said of front-running orders," which is a form of insider trading in which brokers take advantage of their knowledge about pending shifts in the market.
For example, a broker might learn a well-known investor has executed an order for a certain trade in the future and make adjustments in his or her own portfolio because of that information.
Madoff, who ran his own firm and was once the chairman of Nasdaq, is serving a 150-year sentence for running a decades-long Ponzi scheme that lost about $17 billion.