Madoff whistleblower says SEC still too timid
Daylife/AP Photo used by permission
Financial regulators have not fully learned their lessons despite missing the massive fraud engineered by Bernard Madoff, said the man who tried for years to raise the alarm about Madoff’s scheme.
The warning from Harry Markopolos carries the weight of the fame he gained a year ago, including an appearance before Congress to blast the Securities and Exchange Commission for ignoring his tips that something was amiss with Madoff’s investment management business and its years of amazingly consistent profits…
Even now, “The SEC is nowhere near aggressive enough,” Markopolos, 53, told Reuters. “It still has the mind-set where it will only enforce securities law instead of enforcing ethics…”
His book calls for sweeping changes at the SEC such as firing half the agency’s staff and doubling the pay of many positions to attract the best talent. Markopolos would also move the agency out of Washington.
Madoff came onto his radar when Markopolos worked at a Boston money manager and was asked to design a math program to replicate Madoff’s eerie string of returns…
Unable to do so, Markopolos concluded that Madoff was up to no good and debated with colleagues over whether Madoff was running a Ponzi scheme — one where early investors are paid with money from new clients — or was illegally “front-running” orders from clients.
Markopolos reported Madoff to the SEC several times over a number of years. But the agency famously passed up the tips, leading to a public flogging before Congress and a devastating follow-up report by the agency’s inspector general…
Much of the SEC’s staff is too inexperienced to catch sophisticated financial wrongdoing, and too often the agency settles cases without getting defendants to admit guilt, he writes.
I like this guy’s style. Of Madoff he says, “The Death Penalty was too good for him.”
His book comes out this week. I’d love to see him sit down with Charlie Rose on Bloomberg TV and elaborate on the bureaucrats who couldn’t be bothered to act on behalf of the citizens of this land.
Lets have more whistleblowing, flush the crap out of the corrupt systems. Why should they be allowed to rob us with impunity to live lavish and luxurios lifestyles. This is how revolutions are born…
zorki
March 1, 2010 at 7:01 am
The problem is several fold, some of which Mr. Markopolous touched on.
Most of the investigators are entry level positions. After a couple of years the better ones are gobbled up by the private sector for multiples of their government salaries. Those that stay and end up being promoted are those who couldn’t make it in the private sector.
There are too few investigators. For the life of me, I don’t understand why an investigator may only work for the SEC, the FBI, or IRS instead of the government. When they are needed for an investigation, they should be allowed across department lines.
Fines and confiscated property should be put to use to fund more investigations, the same as drug forfeitures finance future drug investigations.
Problems? Sure. But any time a police agency misses something, we scream about their ineptness. On the other hand, we scream louder when they are in our face or overly agressive.
Mr. Fusion
March 1, 2010 at 7:34 am
Dang!!! The very last word there should have been aGGressive.
Mr. Fusion
March 1, 2010 at 7:35 am