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Archives : 2009 : September

SEC Inspector General Attributes Failure to Uncover Madoff Scheme to Agency Incompetence

September 28th, 2009

In a nearly 500-page report, the Securities and Exchange Commission Inspector General H. David Kotz issued detailed findings on how the SEC failed to uncover Bernie Madoff’s colossal Ponzi scheme.  Kotz noted that the SEC had received six credible warnings about Madoff’s far-reaching fraud over 16 years, but failed each time to act and expose the scheme.  Disturbingly, Kotz further observed that despite three examinations and two investigations, “a thorough and competent investigation or examination was never performed.”

For the many thousands of Madoff victims, the report’s findings of incompetence offered little solace.  Indeed, it only confirmed in their minds what they already believed – that their reliance on the SEC to monitor and police broker-dealers was misplaced.  What was surprising, however, was the extent to which the Inspector General took to task the agency that he was tasked to examine.

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