SEC Didn't Act on Madoff Tips

[dbackjon]

The Securities and Exchange Commission learned about what it describes as one of the largest securities frauds in history when Bernard L. Madoff volunteered his confession, raising questions about the agency's ability to police the financial marketplace.

The SEC had the authority to investigate Madoff's investment business, which managed billions of dollars for wealthy investors and philanthropies. Financial analysts raised concerns about Madoff's practices repeatedly over the past decade, including a 1999 letter to the SEC that accused Madoff of running a Ponzi scheme. But the agency did not conduct even a routine examination of the investment business until last week.


http://www.washingtonpost.com/wp-dyn/co ... id=topnews

[Col Hogan]

The more that comes out on this one, the scarier it becomes...

And I don't believe they have a final figure on the loss yet...

[travelinman67]

I guess I don't fully understand the economic mechanisms here. I too have read several reports telling stories about investors who even went so far as to hire private investigators and attorneys to conduct due diligence checks on Madoff. Every one I read said their investigations revealed red flags all over the place. Yet many of them continued to invest with his firms. What's crazier is that these big investment firms and a few foreign banks had no problem investing hundreds of millions, even billions, with Madoff...it appears based solely on his track record and rate of return which was significantly higher than the money management industry median...

...and now, then the shoe finally drops...everyone cries "foul" and tries to blame the SEC? The financial industry has lobbied full force to GUT the SEC for the past 25 years...and BOTH SIDES OF THE AISLE have reaped windfall from those lobbying efforts, and participated in the dissolution of their regulatory authority. What's even more laughable is that some of the investors are suggesting the U.S. government cover the investor's losses.

THEY ABSO-LUTE-LY F&$(KIN HAVE TO BE JOKING.

I realize this is going to "trickle" down to the poor and middle class (always does), but the focus of Madoff's collapse should be on completing a forensic reconstruction of his firms' accounting for at least the past 20 years, if not farther back. There are only two facts that are known: One, that Bernard Madoff either has lied in the past, or is currently lying, and two, the accounts identified by Bernard Madoff as containing the assets that allegedly are the whole of Madoff Investment Securities Advisory Unit, appear to be overstated on his financials. Period!

Just like the folks who look at a steam producing cooling tower and assume the owner is a CO2 polluter, folks in finances should not draw premature/erroneous conclusions until the history book on Madoff Investment's is complete. He obviously was extremely well juiced socially and politically, and my hunch is that there is more here than a basic "Ponzi" scheme. That may be the "schtick" to make the "sale" to mitigate the resolve to investigate further.

[travelinman67]

Damn! I'm so prophetic I even scare myself sometimes...

(...not really)

http://www.bloomberg.com/apps/news?pid= ... =worldwide

Madoff’s Records ‘Utterly Unreliable,’ Says SIPC Head (Update6)

Dec. 16 (Bloomberg) -- Bernard Madoff’s financial records were “utterly unreliable” and will take six months to sort out, said Stephen Harbeck, president of the Securities Investor Protection Corp.

“There are some assets, but I have no idea what the relationships of the assets available are to the claims against them,” Harbeck said on Bloomberg Television. “The records are utterly unreliable on this case.”...

...The SEC was already under fire before Madoff’s alleged fraud came to light. The collapses of investment banks Bear Stearns Cos. and Lehman Brothers Holdings Inc. this year tarnished the SEC’s reputation and lawmakers such as Dodd and Senator Charles Grassley, an Iowa Republican, have questioned its vigilance in enforcing securities laws.

“We share the senator’s interest in determining how this massive fraud was perpetrated,” said SEC spokesman John Nester. “We are acutely focused on pursuing the investigation, protecting customer assets and holding wrongdoers accountable.”

Madoff’s niece, Shana, was a compliance lawyer at his firm and last year married Eric Swanson, a former assistant director of compliance and examinations at the SEC. Swanson left the SEC in August 2006 and is currently the general counsel of Bats Trading Inc., the third-largest U.S. equity exchange by trading volume.

‘Above Reproach’

“Eric Swanson worked at the SEC for 10 years and did not participate in any inquiry of Bernard Madoff Securities or its affiliates while involved in a relationship with Shana, whom he met through her trade association work in the industry,” Bats Trading spokesman Randy Williams said in an e-mailed statement. “Throughout his career, Eric has displayed the highest ethical standards and his reputation has been, and continues to be, above reproach.”

Separately, Madoff made $182,250 in campaign donations since 1993 to federal candidates, the political parties, and securities industry’s political action committee, according to the Center for Responsive Politics. He gave $100,000 to the Democratic Senatorial Campaign Committee, including $25,000 in September. He contributed to both Democratic and Republican members of Congress.

[Ibanez]

This guy swindles and screws people, gets called on it and our Gov't does nothing? Not a big suprise, our gov't doesn't act, it reacts.

[houndawg]

This guy swindles and screws people, gets called on it and our Gov't does nothing? Not a big suprise, our gov't doesn't act, it reacts.

Easy there, hoss, it's not like he robbed a liquor store or smoked pot.

Somebody robbed the Glendale train
this morning at half past nine
Somebody robbed the Glendale train and
I swear, I ain't lying
They made clean off with sixteen G's and
left two men lying cold
Somebody robbed the Glendale train and
madoff with the gold

Thank you, thank you vury mush

(Houndawg has left the building)

[AZGrizFan]

This guy swindles and screws people, gets called on it and our Gov't does nothing? Not a big suprise, our gov't doesn't act, it reacts.

Easy there, hoss, it's not like he robbed a liquor store or smoked pot.

Somebody robbed the Glendale train
this morning at half past nine
Somebody robbed the Glendale train and
I swear, I ain't lying
They made clean off with sixteen G's and
left two men lying cold
Somebody robbed the Glendale train and
madoff with the gold

Thank you, thank you vury mush

(Houndawg has left the building)

Wow. Who knew houdawg had a sense of humor?

He's a regular Bob Dylan.

[Ibanez]

This guy swindles and screws people, gets called on it and our Gov't does nothing? Not a big suprise, our gov't doesn't act, it reacts.

Easy there, hoss, it's not like he robbed a liquor store or smoked pot.

Somebody robbed the Glendale train
this morning at half past nine
Somebody robbed the Glendale train and
I swear, I ain't lying
They made clean off with sixteen G's and
left two men lying cold
Somebody robbed the Glendale train and
madoff with the gold

Thank you, thank you vury mush

(Houndawg has left the building)

No, he just swindled businesses out of money...a regular Richard Whitney.

[travelinman67]

To put this in perspective...three examples.

Many years back, I helped build a regional stormwater collection/pumps system in town. Our part was building a 12' x 18' concrete block pumphouse controls building. The local govt. had the funds to put TWO full time inspectors (county & city) on the jobsite...and we couldn't work unless both inspectors were onsite watching every move we made.
Similar situation on an equipment maintenance bldg. we built for a JC...except there were two full time (city + county), plus two part-time (college district + state) inspectors that examined and tested everything we built.

From another perspective, how many DI programs do you know that do not have at least a part-time (most have a full-time) NCAA Compliance Officer on staff? I am not aware of any.

...yet, a business on Wall Street handling tens of billions of dollars, some from govt. pension funds, operates WITH NO OVERSIGHT for decades? The current SEC Chair acknowledged several brokerages and banks requested an investigation in 2005, yet THE SEC CHOSE NOT TO?

IMHO, the SEC could have had a permanent office in Madoff's building (or minimally, schedule an monthly onsite), responsible for completing monthly reviews, with FULL access to all of Madoff's records.
I'm not talking "Big Brother" looking over his shoulder or having access to he or his employee's personal financial records, I'm talking basic Reviewed financials. The cost could EASILY be paid for by the business, and passed on to their clients.
Is this "more government", yes and no. Based upon what some lawyers have said, since these investor losses can clearly be classified as resulting from "theft", the investor's losses can be taken as a tax deduction. Just shooting from the hip...having already read that around 20 billion of the losses effect U.S. registered businesses, foundations, and individuals, that could easily project into lost tax revenues of hundreds of millions, if not billions of dollars. From my viewpoint, the Feds had a fiduciary responsibility to every taxpayer, for the same purpose that they aggressively establish procedures and regulations to prevent taxpayer fraud/loopholes, and AGGRESSIVELY pursue the average citizen for every penny owed, the Feds have a responsibility to prevent financial industry thefts which could result in EXTREME tax revenue losses.

[dbackjon]

Wow - agree with T-man!!!

[travelinman67]

Wow - agree with T-man!!!

Deep down in your heart, you're an industrialist, Jon. You're just in denial.

If I put your azz up on a D6 Dozer for a day, you'd show up tomorrow wearing a CAT ballcap, Brahma workboots, and show up half hour early every day to take your morning shat in the outhouse and look over yesterday's Builder's Exchange paper.

[dbackjon]

Wow - agree with T-man!!!

Deep down in your heart, you're an industrialist, Jon. You're just in denial.

If I put your azz up on a D6 Dozer for a day, you'd show up tomorrow wearing a CAT ballcap, Brahma workboots, and show up half hour early every day to take your morning shat in the outhouse and look over yesterday's Builder's Exchange paper.

[Ibanez]

The SEC don't rat on thier own kind. I'm not suprised really.