Madoff hid in plain sight - advised regulators on scams
Bernard Madoff, who has been charged with running a Ponzi scheme that may involve as much as $50 billion in losses, advised the SEC on how to protect investors from scam artists when he served on an SEC advisory committee in the early 2000s. He publicly pushed the idea that "In today's regulatory environment, it's virtually impossible to violate rules" in this October 2007 conference. Based on information now available about the $50 billion Ponzi scheme, it appears that not only can rules be violated, but Bernard Madoff used his insider contacts at the SEC and around Wall Street to build a business that the SEC never audited between 1999, when he first received a letter from the SEC raising the question of a Ponzi scheme, until last week when the SEC conducted an examination of his business. In addition to advising the SEC, Madoff served as chairman of the NASDAQ Stock Market.
Donald Langevoort, a Georgetown University law professor, told the Washington Post, "Bernie had a good reputation at the SEC with a lot of highly placed people as an innovator as somebody who speaks his mind and knows what's going on in the industry. I think he was seen as a valuable resource to the commission in its deliberations."
Clearly this reputation Madoff built on Wall Street and in Washington allowed him to operate under the radar. Unfortunately for those now realizing how much they've lost, this lack of oversight by the SEC could result in closed charities and even more significant bank write offs. Exactly what we don't need right now.
We all must remember Warren Buffet's famous quote, "It's only when the tide goes out that you learn who's been swimming naked." Obviously Madoff and those who helped promote him were swimming naked under the waves of greed.
Lita Epstein has written more than 25 books including "Reading Financial Reports for Dummies" and "Trading for Dummies."
Reader Comments (Page 1 of 1)
12-20-2008 @ 7:46AM
SocialCritic said...
Swimming naked indeed! I say check your clothes at the doors to any high office.
As this illustrates, the greater the access to power (Financial, Political, Legal, etc) the greater the need for oversight.
This is why operating on trust is outdated - powerful peoples' decisions have the opportunity, by merit of thier positions, to affect thousands or millions of other peoples lives. I think the pyramid is upside down: most surveillance occurs by government on smaller businesses, and small scale criminals - but business leaders and high government officials should be under continuous surveillance - it should be universal and impersonal - after enough time has passed and enough independent tests have been passed by diverse monitoring bodies old records could be destroyed, and secret or private information could be redacted in broader disclosures - this regimen should apply in particular to government - who said public service should be comfortable? but business executives need a huge dose of accountability as well. Remember that each privilege comes with a corresponding duty.
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12-20-2008 @ 10:34PM
David said...
Whatever bits and pieces of info have been made available in the press, the motherlode of information on Madoff should be the SEC. Apparently not, though.
Madoff's company, Bernard L. Madoff Investment Securities, LLC, had to report to the SEC, like any securities firm. But according to the No More Corporate Secrets blog, there's very little meaningful information in their online reports.
Whatever information is contained in the auditor's report is essentially unavailable, as the report is not posted in the SEC's EDGAR database:
http://nomorecorporatesecrets.blogspot.com/
Mr. Madoff's Secrets
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1-06-2009 @ 1:58PM
David said...
Madoff should be sent back to jail to await his trial.
He is a great risk for flight and is said to be sending jewelry offshore for safety or use later when he takes flight.
Also, the SEC should be given a 5% haircut. Fire the TOP 5%, starting with COX, and let that be a lesson. That would get their attention and those left to carry on would be focussed on their job which is to seek out and prosecute fraud.
Don’t let Cox slip quietly into the night. Fire him!
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1-12-2009 @ 2:56PM
clarewalsh said...
hose SEC fat cats should be criminally charged because they turned their backs onGRAND Thieft
1-12-2009 @ 5:58PM
Clare said...
Once again, the judge avoided sentencing so Madoff can luxuriate in his penthouse digs, while his clients are wondering how they willsurvive...Let Justice Prevail
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