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With the news that the SEC received a 19-page memo in 2005 explaining why it was impossible that Bernard Madoff's operation was anything other than a Ponzi scheme, observers started asking: "Why couldn't regulators pull themselves away from computer solitaire and The View for a few minutes to check up on allegations of the largest Ponzi scheme in the history of the world?"Today The Wall Street Journal reports (subscription required) that Madoff "was examined at least eight times in 16 years by the Securities and Exchange Commission and other regulators, who often came armed with suspicions."
Apparently the SEC found in 2005 that Mr. Madoff was operating as an unregistered investment adviser, but he agreed to register and the matter was not reported to investors.
Huh? This is a guy who's been operating one of the largest hedge fund operations in the world with a firm he's had since 1960 and about 45 years into it you realize that he's been operating unregistered the whole time, thus avoiding much of the regulatory oversight that could have exposed him? And all you do is make him register and don't tell anyone?
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Reader Comments (Page 1 of 1)
1-05-2009 @ 12:17PM
BHarrison said...
This is a perfect example as to how ineffective government oversight really is; and how easy it is for "insiders' with influence to get around the regualtions.
So, for 45 years (since 1960 as noted in the article), Madoff was able to "game" the system, and even become a Chairman of the NASDAQ.
What if ANY, "administrative actions are going to be taken against the regulators, who, inessence, allowed the development of this Ponzi scheme? There should be quite a few "demotions", and firings in regard to all of this. Our government officials "looked the other way" for ALMOST half a century in regard to Madoff's operations, right? The TOP MANAGEMENT of the SEC must be held accountable for these "oversights", and failures to perform their fiduciary responsibilities.
Under these circumstances, the management of the SEC are as responsible as Madoff . . . they blindly (or corruptly) allowed the Ponzi schemes to continue on, even after the substantial documentation that they were provided in 1999. The "career" SEC management need to be taken to task for what has occurred . . . 45 years of "looking the other way" is unconscionable.
Can there be any doubt as to why the American citizens have lost faith in our government?
Meanwhile, the CEOs of failed corporatins, who oversaw the orchestration of similar pyramid and Ponzi schemes (CDOs, CDSs, CMOs, "derivatives", etc.) are STILL collecting ENORMOUSLY EXORBITANT SALARIES and COMPENSATIONS for failed performances through either misfeasance and/or malfeasance.
When are these CEOs going to be removed, indicted, and prosecuted for what THEY have done? When is the outrageous salary and compensation plans for upper management going to be reduced to a reasonable level, with the payment of bonuses retained minimally for a year to deter misfeasance.
The key word in all of this is "IMPLEMENTATION of INTEGRITY" in the FIs, the stock markets, and in the corporations. When are "creative accounting practices" going to be outlawed to maintain integrity in our nation's business operations?
The SEC and other regulatory agencies, financial auditing firms, etc. have done the SAME THING with the FIs, the stock markets, and the corporations as the SEC has done with Madoff during the last 45 years . . . our nation's "business" has simply lost its basic INTEGRITY. It's all a "con job" to enrich the ultra wealthy and influential special interests.
It's time for basic changes in the regulation, oversight, and standards of integrity for the FIs, the stock markets, and corporations. The auditing firms should be at the front line of all of this also.