Politics

Markopolos: I gift wrapped and delivered the largest Ponzi scheme in history to the SEC

By Karina

This morning, the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises is holding a hearing to assess the alleged $50 billion investment fraud engineered by Mr. Bernard L. Madoff. This is the second in a series of hearings that will help to guide the work of the Financial Services Committee and the Capital Markets Subcommittee in the 111th Congress in undertaking the most substantial rewrite of the laws governing the U.S. financial markets since the Great Depression. Earlier coverage of this hearing on The Gavel>>

Chairman Paul Kanjorski, Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises:

Chairman Kanjorski: “Unlike many others who suspected that something was amiss in Mr. Madoff?s operations, Mr. Markopolos took the extra step of alerting authorities at the Securities and Exchange Commission about his concerns. As we will learn from his testimony, Mr. Markopolos was justifiably relentless in ringing alarm bells. Unfortunately, our regulators failed to follow his roadmap and heed his warnings. As a result, thousands of investors were hurt.”

Harry Markopolos, an independent financial fraud investigator for institutional investors and others seeking forensic accounting expertise, as well as a Chartered Financial Analyst and Certified Fraud Examiner:

Markopolos: “As early as May 2000, I provided evidence to the SEC?s Boston Regional Office that should have caused an investigation of Madoff. I re-submitted this evidence with additional support several times between 2000 ? 2008, a period of nine years. Yet nothing was done. Because nothing was done, I became fearful for the safety of my family until the SEC finally acknowledged, after Madoff had been arrested, that it had received credible evidence of Madoff?s Ponzi Scheme several years earlier…I gift wrapped and delivered the largest Ponzi scheme in history to the SEC, and somehow, they couldn’t be bothered to conduct a thorough and proper investigation because they were too busy on matters of higher priority. If a $50 billion dollar Ponzi scheme doesn’t make the SEC’s priority list, then I want to know who sets their priorities.”

Rep. Perlmutter and Mr. Markopolos:

Rep. Perlmutter: “When you vilify people who are regulating the system so that taxpayers don?t have to pick up the pieces, or the depositors of a bank don?t have to pick up the pieces, or shareholders don?t have to pick up the pieces ? but when you vilify those regulators, then you make them out to be the bad guys in the system, then they become the bad guys in the system. There are philosophical differences between my side of the aisle where there?s the need for regulation so the need for taxpayer doesn?t have to pick up all the pieces when everything goes to hell, and wanting to keep the market completely free so that the guy can make the last obscene buck.”

Full post as published by The Gavel on February 04, 2009 (boomark / email).