Pay Reductions and Suspensions Handed Out by SEC
When Bernard Madoff's massive multi-billion dollar fraud was finally revealed to the world, the first thing that popped into the minds of many was: "Heads are going to roll over this!"
I mean, Harry Markopolos warned the SEC MULTIPLE times that Bernard Madoff was running a Ponzi scheme. Markopolos started warning the SEC about Madoff way back in 1999, and continued warning the agency throughout the years. Markopolos wasn't just some random person with a vendetta against a certain company - he was a CFA, CFE and a specialist in forensic accounting. His repeated warnings should have meant something.
As if that wasn't enough, Markopolos sent the SEC a document in 2005 titled "The World's Largest Hedge Fund is a Fraud". Markopolos pointed out 29 different red flags about Madoff's fund that were raising alarm bells in his mind. After reading the report, you will be left to wonder exactly how the SEC let the scheme run for as long as it did. I mean, the SEC actually investigated Madoff's operation multiple times and found nothing wrong - what exactly was going on? Gross incompetence or something more sinister?
Would certain SEC employees lose their jobs over the Bernard Madoff situation? I mean, if the SEC had actually investigated Madoff at any point in time, they surely would have discovered that a massive fraud was taking place. Surely this unbelievable oversight would result in the termination of multiple SEC employees?
The SEC announced late last week that eight of their employees had been disciplined over the Madoff situation. The discipline ran from reductions in pay to month-long suspensions. None of the eight employees were fired.
The performance of 21 different current and former SEC employees was scrutinized, ultimately resulting in eight employees receiving discipline. Ten of the employees who were investigated have left the SEC, which means that they can't be disciplined.
So the SEC misses/ignores the Bernard Madoff Ponzi scheme for nearly ten years, and ultimately nobody from the agency ends up getting fired. That seems about right.
Filed under: General Knowledge