S.E.C. complicit in Madoff fraud, whistleblower says
Harry Markopolos is a fraud examiner who once worked as a fund manager. He knows fraud when he sees it and he saw it as plain as day with Bernard Madoff, who ran the largest Ponzi scheme in history. Markopolous told the Congressional Financial Services Committee so in testimony earlier today. In fact, he tipped off the regulators at the Securities and Exchange Commission multiple times, dating back to 2000. The response? Nothing. The S.E.C. was asleep at the wheel, demonstrating yet again that the deregulatory mindset in Washington allowed the financial services industry to create all kinds of mischief.
Below is a video and an article that should give you the basic facts surrounding the testimony.
Harry Markopolos, a former investment manager who warned U.S. regulators about Bernard Madoff, criticized the Securities and Exchange Commission and said on Wednesday that Madoff had help in running his alleged $50 billion fraud.
Markopolos told Congress that the SEC staff was neither willing nor able to uncover what Madoff, accused of having run the world’s biggest Ponzi scheme, was really doing. He also said that he knows the names of a dozen other so-called feeder funds that helped Madoff raise money from pension funds and wealthy investors and that he would turn these over to regulators this week.
Calling SEC staff “too slow, too young and too undereducated,” Markopolos said regulators “did not understand the red flags and could not do the math.”
“They looked at the size of Madoff and said he’s a big firm and we don’t attack big firms,” Markopolos said about U.S. regulators.
Madoff, a former chairman of the Nasdaq stock market, has been accused of running a massive Ponzi scheme in which he paid of earlier investors with money from later investors.
The failure of the SEC to detect the massive scandal was examined at a U.S. House Financial Services subcommittee hearing on Wednesday. The panel is gathering information before it launches a broad reform of U.S. financial regulations.
At the hearing, Markopolos described his probe of Madoff and attempts to share information with SEC officials. As early as May 2000, Markopolos said, he provided the SEC’s Boston office with evidence that he said should have triggered an agency investigation of Madoff.
Over the subsequent years, Markopolos said he resubmitted the evidence to the agency, but to no avail.
“I gift-wrapped and delivered the largest Ponzi scheme to them,” said Markopolos, who is now working as a fraud examiner.
Click on the link below to read the rest of this article. Needless to say, this is yet another case where no new laws needed to be crafted to prevent massive fraud. All that was necessary was for regulators to enforce the laws already on the books — a clear case of Cognitive Regulatory Capture. But, I am sure you know what is going to happen: the Madoff ponzi scheme and other scandals will cause the Obama administration to go for “regulation heavy” and America will tilt from one extreme to the other – dealing a fatal blow to chances for an early recovery to the banking crisis. Judging from statements already made by Obama and his team, “regulation heavy” is coming very soon.
Whistleblower says Madoff had help, blasts SEC – Reuters