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Anonymous
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I don't know why Cox is surprised- after telling regulators to take an 8 year "coffee break" on policing/enforcement :???:
Cox says SEC staff failed to probe Madoff
45 minutes ago
WASHINGTON (AP) — Staff at the Securities and Exchange Commission repeatedly failed over the past decade to fully investigate credible allegations of wrongdoing by money manager Bernard Madoff, the head of the SEC said Tuesday, calling it a serious agency breakdown.
SEC Chairman Christopher Cox said he is "gravely concerned by the apparent multiple failures" by staff to look into claims about Madoff's business and to seek formal authority to investigate.
Madoff was charged with fraud last week in what is being called one of the biggest Ponzi schemes on record, with investors possibly losing more than $50 billion.
Cox said in a statement he has asked the SEC's inspector general to conduct a full review of the agency's handling of the Madoff case.
The statement issued by Cox was a stunning declaration in a scandal that has produced a series of dramatic developments.
Shock waves from the Madoff affair have radiated around the globe as the number of prestigious charitable foundations, big international banks and individual investors said to have fallen victim to an unprecedented fraud has grown. U.S. investigators are laboring to deconstruct the scheme.
Investors combing through Madoff's books have discovered that he falsified documents to hide massive losses to investors, an official helping to oversee the liquidation of the firm, Bernard L. Madoff Investment Securities, said Tuesday.
Stephen Harbeck, chief executive of the Securities Investor Protection Corp., told The Associated Press that there are different sets of books that investigators are sorting through — one set tracks the losses at the firm's investment advisory arm, while another is what investors were shown.
The SEC has come under criticism for having looked into Madoff's business in 2007 and not referring the matter to the agency's commissioners for enforcement action. Questions arose of whether the agency was lax in failing to scrutinize the operations of Madoff — an influential Wall Street figure who had been chairman of the Nasdaq Stock Market — and to respond to alarms raised about them.
Cox said in the statement that he and fellow commissioners have met multiple times since late last week "to seek answers to the question of how Mr. Madoff's vast scheme remained undetected by regulators and law enforcement for so long."
"Our initial findings have been deeply troubling," Cox said. They learned that "credible and specific allegations" regarding Madoff's misconduct, dating to at least 1999, were repeatedly brought to the SEC staff's attention but not formally acted on.
A securities executive, Harry Markopolos, complained to the SEC's Boston office in May 1999. Markopolos told the SEC staff they should investigate Madoff because it was impossible for the kind of profit he was making to have been gained legally. Markopolos also wrote to the SEC in November 2005 about Madoff's operation.
Because a formal probe into Madoff's business wasn't initiated, SEC investigators relied on information voluntarily provided by Madoff and his firm, rather than issuing subpoenas to compel him to provide material.
"I am gravely concerned by the apparent multiple failures over at least a decade to thoroughly investigate these allegations or at any point to seek formal authority to pursue them," Cox said.