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

Legal News

: JURIST - The Paper Chase

SEC inspector general report details Madoff investigation errors

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

[JURIST] The US Securities and Exchange Commission (SEC) made a number of missteps that could have uncovered the fraud committed by Bernard Madoff at an earlier date, according to an inspector general's report released Wednesday. The report indicated that between 1992 and 2008, six complaints were lodged with the SEC concerning Madoff's hedge fund operation. One of the complaints, submitted in 2005 by independent fraud investigator Harry Markopolos, raised doubts as to the level of return seen with Madoff's fund. The inspector general's report concluded: As the foregoing demonstrates, despite numerous credible and detailed complaints, the SEC never properly examined or investigated Madoff's trading and never took the necessary, but basic, steps to determine if Madoff was operating a Ponzi scheme. Had these efforts been made with appropriate follow-up at any time beginning in June of 1992 until December 2008, the SEC could have uncovered the Ponzi scheme well before Madoff confessed.SEC chair Mary Schapiro released a statement expressing not only regret at missing the warning signs, but confidence that the agency has implemented the proper regulations to prevent a similar event from taking place in the future.The Madoff case has had regulators in both the US and abroad reevaluating their policies. In early August, Madoff's former financial chief Frank DiPascali pleaded guilty to charges of fraud, conspiracy, tax evasion, and perjury for his role in the multi-billion dollar ponzi scheme. In mid-July, SEC chair Schapiro pledged more vigorous enforcement of securities policies, two weeks after Madoff was sentenced to 150 years in prison.

Full post as published by JURIST - The Paper Chase on September 03, 2009 (boomark / email).