Harry Markopolos Offers Testimony To Congress
Harry Markopolos is currently testifying on Capitol Hill as I write this article.
As you can imagine, Markopolos isn't saying very nice things about the SEC and the way that they tackle high-profile cases and "big players" such as Bernard Madoff.
In case you didn't know, Markopolos correctly figured out that Bernard Madoff and his returns were fraudulent, and practically begged the SEC to investigate for nine years.
According to his testimony today, Markopolos sniffed out the fraud in "just four hours", but couldn't convince the SEC to thoroughly investigate Madoff and his company.
Harry Markopolos went on to say that the SEC was "over matched, too slow and too inexperienced" to understand what Madoff was doing. He also said that a $7 billion dollar fraud became a $50 billion dollar fraud due to the SEC's refusal to investigate and overall ineptitude.
He also said that only two investigators in the SEC's Boston office took his concerns seriously, but that "senior" SEC officials and the agency's New York office "quashed" the probe.
Markopolos claims that the SEC's refusal to act put his life in senior danger.
He claimed that the SEC was a "captive agency" that was beholden to the companies that they were supposed to be watching.
Markopolos also had the following to say during his testimony:
-the Wall Street Journal was given the story three years ago, but the paper didn't do anything
-the SEC "might have one Bloomberg terminal" in every regional office
-the SEC "had no idea how to do the math" that would be necessary to catch Madoff
-Markopolos offered to go "undercover" to help the SEC to try and catch Madoff
-SEC investigators should receive bonuses for helping to catch "big fish"
-there are too many "20-somethings" at the SEC who don't have the necessary experience to catch someone like Madoff
-Markopolos has a list of "mini- and medium-sized Madoffs" that he is preparing to hand over to the SEC
-he is advocating sweeping changes at the SEC
-"if you flew the entire SEC staff to Fenway Park, they wouldn't be able to find first base"
-the SEC is staffed with "3,500 chickens and we need to get some foxes in there."
-feeder funds should be investigated because they "willfully turned a blind eye to the red flags".
-the Russian mob and Latin American cartels were investors in Madoff's company
-believes that senior editors at the WSJ "respected and feared" Madoff, so they never allowed a reporter to pursue the story
-the SEC "ignores the big cases"
-Markopolos turned over his report to Eliot Spitzer, then attorney-general of New York
-he is planning on turning in a "$1 billion dollar" Ponzi scheme to the SEC on Thursday
-called the NASD a "corrupt organization" that does anything to protect its members
-Madoff had "a lot of help" in pulling off the fraud
-Markopolos had "hard evidence" against Madoff but was still ignored
Those are the interesting quotes that I pulled from the testimony offered by Markopolos. There are obviously a number of bombshell quotes that could be turned into entire articles by themselves.
We'll have more about this testimony tomorrow..
Filed under: Hedge Fund News | Stock Market Scandals