Bernard Madoff: An Epilogue The SEC Looked but Failed to See (Part II)
6. After conducting two investigations and three examinations from 1992 onward, relating to the “detailed and credible” complaints that Madoff was possibly operating a Ponzi scheme, at no time did the SEC follow the retained expert’s advice and verify Madoff’s trading with an independent third party, nor did it conduct a Ponzi scheme examination or investigation of Madoff. The SEC did request records from the Depository Trust Company (DTC) (an independent third party), but the record request was made to Madoff. Had the request been made directly to DTC, there was an “excellent chance” they would have uncovered Madoff’s Ponzi scheme in 1992.
7, SEC examiners drafted a letter to two different independent third parties requesting independent trade data, but never sent the letters because in one case, it would have been “too time consuming” to analyze the data, had they received it. No reason was given for not mailing the second letter. Again, if the letters had been sent, they would have provided information necessary to reveal the Ponzi scheme.
8. When examiners questioned Madoff, they took his evasive and sometimes inconsistent answers at face value and failed to request verification.
9. As excuses for the investigators’ and examiners’ abysmal record, the report says examiners were “inexperienced” and “confused,” failed to follow up inconsistencies, failed to verify information, disregarded incriminating evidence, gullibly accepted Madoff’s lies, inconsistencies and misrepresentations as fact, failed to trace funds and generally ignored almost indisputable proof of the existence of the grandest of all Ponzi schemes.
Just another example of your tax dollars at work.
To read the entire Executive Summary click here. For those of you who are detail-oriented with a strong stomach and nothing better to do, read the entire report by clicking here.