Tipster: SEC Failed To Heed Warnings On Madoff

[one...two...tree 2,762]

Independent financial fraud investigator Harry Markopolos testifies about the Madoff investment scandal before a House subcommittee on Wednesday.

Harry Markopolos waged a decade-long campaign to alert regulators to problems in the operations of fallen money manager Bernard Madoff and his alleged Ponzi scheme. But, in an appearance before a House panel Wednesday, Markopolos said the Securities and Exchange Commission failed to act despite receiving credible allegations of fraud.Pennsylvania Democrat Paul Kanjorski, chairman of a House Financial Services subcommittee holding the hearing, told top SEC officials that the agency is failing to cooperate with a congressional probe into its failure to uncover the alleged $50 billion Bernard Madoff fraud.

Kanjorski vented frustration after an SEC official said the agency can't answer lawmakers' questions about the Madoff case because it's under investigation. SEC officials say they are looking at possible changes in the wake of the scandal, including more frequent examinations of investment advisers and improving its process for assessing risk.

Markopolos testified that because of the agency's inaction, "I became fearful for the safety of my family."

He said "the SEC is ... captive to the industry it regulates and is afraid" to bring big cases against prominent individuals. The agency "roars like a lion and bites like a flea," Markopolos said.

Madoff, a prominent Wall Street figure, was arrested in December after allegedly confessing to bilking investors of more than $50 billion in what the authorities say was a giant Ponzi scheme, possibly the largest ever. Markopolos' repeated warnings to SEC staff that Madoff was running a massive pyramid scheme have cast the securities industry executive and fraud investigator as an unheeded prophet in the scandal.

"The SEC was never capable of catching Mr. Madoff. He could have gone to $100 billion" without being discovered, Markopolos testified at the hearing. "It took me about five minutes to figure out he was a fraud."

Markopolos brought his allegations to the SEC about improprieties in Madoff's business starting in 2000. He fruitlessly pursued the quest through this decade with agency staff from Boston to New York to Washington, but the regulators never acted.

Now thousands of victims who lost money investing in Madoff's fund, which was separate from his securities brokerage business, have been identified. Among them are ordinary people and Hollywood celebrities — as well as big hedge funds, international banks and charities in the U.S., Europe and Asia. Life savings have evaporated, foundations have been wiped out and at least one investor apparently was pushed to commit suicide.

And the SEC has been sustaining volleys of criticism from lawmakers and investor advocates over its failure to discover Madoff's alleged fraud, which could be the biggest Ponzi scheme ever, despite the credible allegations brought to it over the years.

Markopolos said he determined there was no way Madoff could have been making the consistent returns he claimed using the trading strategy he touted to prospective investors.

Madoff, who was at one point chairman of the Nasdaq Stock Market and sat on SEC advisory committees, was "one of the most powerful men on Wall Street and in a position to easily end our careers or worse," Markopolos said.

Calling the SEC nonfunctional and harmful to the reputation of the U.S. as a global financial leader, Markopolos recommended ways to revamp the agency, including replacing its senior staff and establishing a central office to receive complaints from whistle-blowers.

In December, Christopher Cox, then the SEC chairman, pinned the blame on the agency's career staff for the failure over a decade to detect what Madoff was doing. He ordered the SEC's inspector general, H. David Kotz, to determine what went wrong. Kotz has expanded his inquiry to examine the operations of the divisions led by Thomsen, who has been the enforcement chief since mid-2005, and Richards, who has held that position since mid-1995.

A trustee liquidating Madoff's investment firm told a judge in U.S. Bankruptcy Court that nearly $950 million in cash and securities has been recovered for investors. Trustee Irving Picard said $111.4 million in cash from financial institutions had been recovered.

Last week, JPMorgan Chase & Co. and Bank of New York Mellon Corp. said they would transfer a combined $534.9 million from Madoff's investment firm accounts to Picard.

http://www.npr.org/templates/story/story.p...oryId=100238361

[Jasman0717 9]

Howard said it was because they were too busy investigating him

[mawilson 2,133]

Update: Madoff was charged today with 11 criminal counts:

1. Securities Fraud
2. Investment Adviser Fraud
3. Mail Fraud
4. Wire Fraud
5. International Money Laundering To Promote Specified Unlawful Activity
6. International Money Laundering To Conceal and Disguise The Proceeds of Specified Unlawful Activity
7. Money Laundering
8. False Statements
9. Perjury
10. Making a False Filing with the SEC
11. Theft from an Employee Benefit Plan

[one...two...tree 2,762]

Did you ever work for Madoff, mawilson?

[mawilson 2,133]

Did you ever work for Madoff, mawilson?

Nope.

[Trompe le Monde 1,107]

65% likelihood that Madoff scandal involves the mob - according to a cnbc 'percentage likelihood' whipround wild guess on a panel of geeks