July 2, 2009
SEC Blew Chance to Expose Madoff's Fraud in 2004
Fascinating article in today's Washington Post: Zachary Goldfarb reports that in 2004 an SEC staff attorney in Compliance, Inspections and Examinations (who previously worked at the American Stock Exchange and understood complicated trading strategies) figured out that there was something wrong with the way Madoff was running his business and submitted a list of detailed questions to her supervisor to pursue the investigation. However, her supervisor told her to turn her attention to mutual funds; at that time the SEC was feeling the heat because the New York Attorney General's market-timing investigations made the SEC look bad. The Madoff inquiry went nowhere, and the SEC attorney left the agency in 2006, complaining of a hostile work environment. WPost, Staffer at SEC Had Warned Of Madoff Lawyer Raised Alarm, Then Was Pointed Elsewhere.
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