SEC Didn't Act on Madoff Tips

[Cronopio]

Source: Washington Post

... Madoff avoided scrutiny despite the dogged bell-ringing of a Boston accountant, employed by another investment firm, who repeatedly accused Madoff of breaking the law in a series of letters to the SEC that began in 1999. The accountant, Harry Markopolos, said he sent his most recent letter in April.

A former SEC enforcement official said the letters should have raised red flags for regulators.

"It is not common to get complaints about somebody who's running a large amount of money that it's a Ponzi scheme," said the former official, speaking on condition of anonymity.

He said that investigating a Ponzi scheme is not difficult: The agency can simply demand proof that the investment adviser holds the amount of money he claims to hold. And he added that regulators also should have noticed that Madoff was audited by a tiny company with no reputation. He said there are only a few accounting firms with the sophistication to audit an investment adviser that, at the time of registration with the SEC, reported $17 billion on assets.

Regulators should have noticed instantly, he said, that Madoff's auditor was not on the list.

Read more: http://www.washingtonpost.com/wp-dyn/content/article/2008/12/15/AR2008121502971.html?hpid=topnews

---

"But he's one of us. Who are we to question?"

[HowHasItComeToThis]

1. GOOD JOB COXIE... YOU SCHILL

http://www.youtube.com/watch?v=50dp5YvEbrQ

http://www.youtube.com/watch?v=-b7uMBh4sJo&feature=related

[UpInArms]

5. see my post #4

[Virginia Dare]

8. Heckuva job dontcha mean?...n/t

[ellie]

2. No words really

It's like they were all in collusion with each other. Bunch of crooks.

[remedy1]

3. What a surprise...

The SEC is much like the Medical Examiner. They just pick up the corpses.

[UpInArms]

4. Christopher Cox's background

http://news.bbc.co.uk/2/hi/business/4726413.stm

A US Senate panel has backed Republican Congressman Christopher Cox to head the US markets watchdog, the Securities and Exchange Commission (SEC).

Mr Cox was nominated by President George W Bush to succeed William Donaldson, who stepped down on 30 June.

He now faces a confirmation by the 100 member Senate, a vote he should win.

Mr Cox is expected to adopt a more "laissez-faire" approach, which some fear could mean a more relaxed regulatory regime.

Mr Cox, a former corporate lawyer, is seen as close to the finance industry.

As a congressman, he was responsible for steering through reforms which made investor lawsuits more difficult - an achievement hailed by some business groups.

Roll-back?

But consumer and investor groups claimed that it cut back on accountability in the corporate world and helped create the opportunity for scandals such as Enron and WorldCom to take place.

<snip>

Mr Cox has yet to say what his plans are for the Commission, where he will oversee corporate disclosure, stock market regulation and investigations into allegations of corporate wrongdoing.

But he did signal that he could adopt a more conciliatory approach to business during a press conference with President Bush where he promised that the SEC would work with US businesspeople "to help build a better America".

Accounting and finance companies have made large contributions to his political campaigns. Between 1993 and 2004, the financial services sector was the single biggest source of corporate campaign donations, contributing 21% of the total or almost $1m.

[nc4bo]

11. I was lazy but still curious. I was just getting ready to fire up The Google follow the money

and here you went and did it for me :rofl:

We really do need to clean house. O's got his work cut out for him dealing with this circus.

[specimenfred1984]

13. Cox is a completely deluded and corrupt repuke

http://www.american.com/archive/2007/march-april-magazine-contents/unmasking-chris-cox/

[depakid]

17. Yet the Senate Dems with Reid at the helm meekly went along

As this blogger notes- it was a cakewalk (despite the knowlesge at the time as to what sort of person Cox was- and is, and the corrupt deregulary policies he stood for).

Christopher Cox Confirmation Hearing

The confirmation hearings for the new chair of the Securities and Exchange Commission could have been very contentious but they were not. President Bush selected a United States Congressmen for the position and his colleagues in the US Senate gave him a very gentle time at the hearings. Moreover, the President has given the Democratic leadership their say in the two minority party appointments to the Commission, appointments that are also pending. The skids are greased for this confirmation. It was an impressive series of political maneuvers by the Administration, not unlike its choice for the open Surpeme Court seat -- it could have been a firestorm but was not. Business leaders were not happy with Donaldson -- the chair of the SEC has a more direct effect on business operations in the United States than does a Justice on the United States Supreme Court -- and Democrats sought to identify with and perserve Donaldson's initiatives. It could have turned partisan.

Cox did say he would not seek to overturn the FASB's requirement that United States firms begin expensing of executive options on their income statement, something he fought as a representative of California's high-tech community. The battle had been lost: "These question have been asked, answered and deliberated on. Most importantly, we have clarity." He said. He also noted that he would not seek to reverse significant rules approved by his predecessor, William H. Donaldson, who was a "stand-up guy."

There is no doubt that Donaldson was well intentioned but he acted on intuition, not data, and, on some matters (mutual fund regulation), he listened to attentively to the eager regulatory impulses of a necessarily young and green SEC staff. On other matters, when dealing with an industry in which he participated (stock trading), he was too congenial to the arguments of the established players (the NYSE). Applaud his intentions but question his judgment.

http://lawprofessors.typepad.com/business_law/2005/07/christopher_cox.html

[elleng]

6. Interesting article

discussing complex situation.

Madoff had SEVERAL investment entities; 'bad' one was 'new.'

And Arthur Levitt, former SEC Chair, recognizes difficulty of recognizing the bad stuff.

[Turbineguy]

7. The SEC has been involved

in a social engineering experiment to find out what happens when you destroy everybody's retirement plan.

[aquart]

9. I pray his family got burned in this.

But I doubt it.

[Cronopio]

12. Unless his family was actively in on the take, my schedenfreude doesn't go quite that far.

Although if you meant "family" in the Corleone sense, I wholeheartedly agree.

[Baby Snooks]

10. Thems that's got the gold makes the rules...

The SEC didn't act on the letters because Bernie Madoff had the right connections which is why the SEC didn't act on the letters about Enron. Thems that's got the gold makes the rules. Even when they don't really have the gold.

[sarcasmo]

14. SEC, another corrupt government organization.

[truedelphi]

15. This anecdote at first might seem unrelated but is funny and cuts to the chase

Quite a while ago, in the early days of electronic bulletin boards, people first became aware of the ramifications of the disease known as Mad Cow Disease.

"Can cats get this disease?" one frantic pet owner queried.

"Maybe, maybe not," one wit responded. "But in any event - how would you ever know!"


Madoff was doing things that were not that far afield from every other hedge field notion. SIV's, Credit Defaults, and other scams were not all that different from what he is being charged with.

And now it is being surmised that perhaps he let himself be indicted so that the details of the entire fraud-strewn environment of "Wall Street" practices can be thoroughly examined.

A long time ago it was said that Wall Street is nothing more than a casino, although you don't get cheap food and free drinks while you are taken for the ride.

[SOS]

16. The SEC has been Bushed

Mr. Seligman said there were three causes to the current problems at the commission:
"A Congress that’s been comfortable with vast unregulated areas, such as hedge funds, which sends a message to enforcement.
The failure since 2005 to increase the enforcement budget.
And some commissioners whose skepticism about enforcement may have undermined the S.E.C.’s effectiveness.”

http://www.nytimes.com/2008/12/16/business/16secure.html

Or in other words, the SEC has been sound asleep for years.

[unkachuck]

18. does the duped wealthy investor....

....now believe in good government?

"...investigating a Ponzi scheme is not difficult: The agency can simply demand proof that the investment adviser holds the amount of money he claims to hold."

....I have my doubts....

....dear former affluent Republican voter; selecting a political party to support might require more research and analysis than listening to talk-radio....lower taxes, be-afraid-defense, anti-gay, anti-abortion, anti-everything-that-ain't-us rhetoric might sound delicious, but in the future, consider the price to be paid....

....what the hell, since you're one of us now, Welcome!

[Cronopio]

20. If there are no athiests in foxholes, there are no libertarians in financial meltdowns. nt

[underpants]

19. Oh come on they couldn't bust him he was soooo smart sooo talented

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=103x409166

[Hannah Bell]

21. Of course they didn't.