Home -> Law Blog Directory -> Legal News Blogs -> JURIST - The Paper Chase

Legal News

: JURIST - The Paper Chase

SEC officials pledge new commitment to enforcement in Madoff hearing

By Bernard Hibbitts (editor) and University of Pittsburgh School of Law students.

[JURIST] US Securities and Exchange Commission (SEC) officials on Tuesday said that the SEC is committed to greater enforcement in the wake of the recently-revealed fraud scheme allegedly perpetrated by Bernard Madoff, at a hearing before the US Senate Banking Committee. The Committee, chaired by Senator Christopher Dodd (D-CT), heard testimony from two victims of the alleged Madoff fraud, as well as SEC Division of Enforcement Director Linda Thomsen, SEC Office of Compliance Inspections and Examinations Director Lori Richards, and Interim CEO of the Financial Industry Regulatory Authority Stephen Luparello. Richards testified:The agency's staff are dedicated, hardworking, and keenly committed to the agency's mission to protect investors. Speaking as an examiner, we are focused hard on fraud, and we are committed to finding fraud. We examine many different firms -- these include many that are run honestly and in compliance with the law, and they also include those that are engaged in deception, dishonesty, falsification of records and fraud of various kinds. Examinations have identified many different types of frauds, including carefully-hidden Ponzi schemes.Thomsen told the Committee that the SEC was "committed to finding way to make fraud less likely and fraud detection more likely," and called for increased resources to bolster the agency's effort. Madoff was charged with securities fraud last month. Madoff has been charged with violating the anti-fraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940. Madoff allegedly told two employees of his firm in December that his investment advisory business was "basically, a giant Ponzi scheme." Last month, UK financial firm Bramdean Alternatives Limited raised concerns about the US financial regulatory process after its value dropped by more than 35 percent following news of its exposure to the fraud. In the week following Madoff's charges, SEC Chairman Christopher Cox said that he would launch an immediate investigation into how the fraud allegedly perpetrated by Bernard Madoff went undetected for so long. Last month, then-President-elect Barack Obama named Mary Schapiro as the SEC Chairman, replacing Cox.

Full post as published by JURIST - The Paper Chase on January 28, 2009 (boomark / email).