Maddoff's Investment firm raised red flags for years.

[Liberal_in_LA]

http://online.wsj.com/article/SB122910977401502369.html?mod=googlenews_wsj

Harry Markopolos, who years ago worked for a rival firm, researched Mr. Madoff's stock-options strategy and was convinced the results likely weren't real.

"Madoff Securities is the world's largest Ponzi Scheme," Mr. Markopolos, wrote in a letter to the U.S. Securities and Exchange Commission in 1999.

Mr. Markopolos pursued his accusations over the past nine years, dealing with both the New York and Boston bureaus of the SEC, according to documents he sent to the SEC reviewed by The Wall Street Journal.

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Until at least November, 2006, the firm, which claimed to manage billions of dollars and be among the largest market makers in the stock market, used as its auditor Friehling & Horowitz, a small New City, New York firm.

Mr. Vos says his firm hired a private investigator and determined that the accounting firm had only three employees, one of whom was 78 and lived in Florida, and another was a secretary, and that it operated in a 13 foot by 18 foot office. His firm felt that was too small an operation to keep an eye on such a large firm operating a complicated trading strategy. A message left for the accounting firm was not returned.

[brentspeak]

1. Why did the SEC ignore the entire matter?

The whole system is thoroughly corrupt.

[depakid]

2. Because they breached their duties

-and may well have been discouraged from following through by corrupt, inept and arrogant Republican appointees at the agency.

That's basically been the pattern- and if Obama has a lick of sense, he'll realize that such people at ALL of the federral agencies- as well as Bush's political appointees, will in time havce to be held accountable, if deals like these are to ever be kept from repeating themselves.