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Ear to the Ground

SEC Missed Multiple Opportunities to Bust Madoff

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Posted on Sep 2, 2009
Madoff
AP / Louis Lanzano

It was a sad case of too little, too late when it came to the Securities and Exchange Commission’s readings of Bernie Madoff’s now-collapsed house of cards. On Wednesday, the SEC released a report about Madoff’s massive financial boondoggle, detailing the many moments in which chances were missed to stop the damage from spreading as far as it did.  —KA

BusinessWeek:

“[D]espite numerous credible and detailed complaints, the SEC never properly examined or investigated Madoff’s trading and never took the necessary, but basic, steps to determine if Madoff was running a Ponzi scheme,” Inspector General H. David Kotz said in the report. “Had these efforts been made with appropriate follow-up at any time beginning in June of 1992 until December 2008, the SEC could have uncovered the Ponzi scheme well before Madoff confessed.”

The investigation found that between 1992 and 2008, the SEC received six credible complaints that “raised significant red flags” about Madoff’s operations and was also aware of two articles in business publications, published in 2001, that raised questions about Madoff’s remarkably consistent returns. The SEC conducted three examinations and two investigations of Madoff during that time period, but either accepted Madoff’s explanations or failed to follow up on questions and inconsistencies in the information the agency was given.

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By SteveL, September 3, 2009 at 4:04 pm Link to this comment

We were governed eight years by an administration that did not believe in
regulation.  Thanks Bush.

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By Folktruther, September 3, 2009 at 1:58 pm Link to this comment

I’m interested, Freddy.  It’s amazing that an article in Barron’s appeared as early as 2001, and still nothing was done.  Madoff stated that he was astonished that his fraud could go on so long.  I wonder how this was possible.  Did he bribe people?
It is becoming apparent that American Law and Justice is too corrupt to function.

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RAE's avatar

By RAE, September 3, 2009 at 12:59 pm Link to this comment

Of course the SEC knew about Madoff… they didn’t “miss” anything! They DELIBERATELY let him carry on BECAUSE, in my opinion, IT PROFITED THEM TO DO SO.

This bunch knows or cares about only ONE thing - PROFIT. I have no idea how the SEC benefited by Madoff’s ponzi scheme, but I’d be absolutely astonished if the majority of the members didn’t profit somehow by allowing/enabling this scandal to flourish.

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By Blackspeare, September 3, 2009 at 9:34 am Link to this comment

People forget that in a Ponzi scheme, those people that get involved early make money.  I would say that hundreds of people made out pretty well with Madoff——but where are they??!!——laying low, counting their money and perhaps having a good laugh?

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Fat Freddy's avatar

By Fat Freddy, September 3, 2009 at 3:20 am Link to this comment

If anybody is interested, here’s an hour long podcast from NPR affiliate WHYY in Philadelphia which aired 8/31/09:

In 2001, business reporter ERIN ARVEDLUND wrote an article for the financial paper, “Barrons,” questioning Bernard Madoff’s business practices and returns on Wall Street. Her story was soon buried by the news of 9/11 and went on to live in Moscow, reporting for the New York Times, and working on Wall Street herself. In December 2008 Arvedlund watched the TV news unraveling Bernie Madoff’s Ponzi scheme and has turned her reporting into a new book on how Madoff fooled his investors and the SEC. It’s called, “The Rise and Fall of Bernie Madoff: Too Good to Be True.” Listen to the mp3

http://www.whyy.org/podcast/083109_100630.mp3


Radio Times with Marty Moss-Coane

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By Folktruther, September 3, 2009 at 12:40 am Link to this comment

The Sec, Wall Street and both political parties have protected Madoff and are still protecting him to prevent people from understanding where he invested the money he didn’t buy stocks with.  Even pseudo-progressive organs like Truthdig are protecting him with bullshit. 

SEC obviously knew that Madoff was running a fraud, as did much of Wall Street, and whistleblowers said so, in detail, at the time but, amazingly, they were ignored.  And they are still being ignored.  Some deeep scandal appears to be buried here.

The American power system is extremely corrupt and senile, and no reasonable person expects much of it.  But stealing 60 billion dollars and just ignoring the details of the crime is still not possible, even in the US.

    WHERE WAS MADOFF INVESTING THE MONEY HE STOLE?

Inquiring minds want to know.

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By LostHills, September 2, 2009 at 8:49 pm Link to this comment

If they busted all the criminals, the whole house of cards would come down. They only bust the stupidest and most flagrant violators, and then only when they absolutely have to.

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