Monday morning Bernie Madoff received a 150-year sentence for operating an estimated $65 billion Ponzi scheme, the maximum sentence he could have received from the U.S District Court. Hundreds of scathing comments are flowing into blogs and other news venues spewing venom at Madoff for his incredible crime.
We would like to see some of this anger reserved for the agencies whose job it was to regulate Madoff.
Remember that Madoff did not operate a hedge fund, as was often reported, but acted as an Investment Advisor and operated a broker dealer in full view of the Securities and Exchange Commission (SEC). Remember also that the SEC was given a detailed analysis highlighting 29 red flags offering a compelling argument that Madoff’s operation was either a Ponzi scheme or engaged in illegal front running nearly a decade before it blew up.
It seems to us that the lack of action by the SEC goes beyond mere incompetence and enters into the realm of culpability. Go back and look at the work done by Harry Markopolos in revealing the Madoff scheme. It seems ridiculous to us that he was doing this work instead of the SEC, even more ridiculous that the SEC given a set of facts could not take it the rest of the way. That Markopolos had to compile this document proved incompetence, that the SEC did not use it to put an end to the scheme indicates something worse.
Tags: Bernard Madoff, SEC
