SEC Missing In Action on Financial Crisis Had Knowledge of Madoff Wrongdoing 9 Years Ago

Already under fire since then-presidential candidate John McCain called for his ouster as Securities and Exchange Commission chairman, Chris Cox had to admit Monday night that the SEC dropped the ball miserably and repeatedly over the course of nine years regarding Bernard Madoff’s $50 billion bilking of investors.

In a statement released by the SEC, Cox said in part:

Since Commissioners were first informed of the Madoff investigation last week, the Commission has met multiple times on an emergency basis to seek answers to the question of how Mr. Madoff’s vast scheme remained undetected by regulators and law enforcement for so long. Our initial findings have been deeply troubling. The Commission has learned that credible and specific allegations regarding Mr. Madoff’s financial wrongdoing, going back to at least 1999, were repeatedly brought to the attention of SEC staff, but were never recommended to the Commission for action. I am gravely concerned by the apparent multiple failures over at least a decade to thoroughly investigate these allegations or at any point to seek formal authority to pursue them. Moreover, a consequence of the failure to seek a formal order of investigation from the Commission is that subpoena power was not used to obtain information, but rather the staff relied upon information voluntarily produced by Mr. Madoff and his firm.blockquote>
Cox’s SEC bio says, “During his tenure at the SEC, Chairman Cox has made vigorous enforcement of the securities laws the agency’s top priority …”  Well, in the case of Madoff, vigorous began when Madoff was exposed by his son.  The SEC’s statement on Monday night practically trips over itself proclaiming the agency “… took emergency action …” dedicated “every necessary resource …” met “multiple times on an emergency basis” and will be conducting a “full and immediate review.”  Sounds like a veritable orgy of enforcement activity over at the ol’ SEC.

Whew!  All of this just since last Friday.  Did I mention that the SEC was made aware of Madoff’s sketchy dealings beginning nine years ago?  I believe Mr. Madoff would still be working the Ponzi scheme today had his own son not turned him in to authorities.

After they take the flak who wrote Cox’s statement out back and shoot them, someone needs to fire Chris Cox and the rest of the commissioners.