SEC fumbled 5 Madoff probes, report finds
U.S. securities regulators missed repeated chances to uncover Bernard Madoff's Ponzi scheme, a sharply critical review by a federal watchdog said on Wednesday.
A summary of a report by the U.S. Securities and Exchange Commission's Inspector General, released by the SEC, described five investigations the SEC launched into Madoff's business because of complaints dating to 1992, and said a thorough and competent investigation or examination was never performed.
SEC examiners caught Madoff in contradictions about his investment business but failed to dig deeper for the truth, the inspector found. At one point, the SEC's enforcement staff caught Madoff in lies and misrepresentations, but failed to follow up and accepted his explanations.
Madoff pleaded guilty in March to orchestrating a worldwide $65 billion Ponzi scheme over 20 years, and was sentenced to 150 years in prison.
Congressional hearings this year focused on SEC missteps and SEC chairwoman Mary Schapiro promised reforms.
Schapiro said in a statement on Wednesday that some reforms to help the SEC better detect fraud had been implemented.
The full 450-page report is expected on Friday.
U.S. Sen. Charles Grassley, a Republican, said in a statement on Wednesday that the SEC's faults in reviewing the Madoff case were further evidence of a culture of deference toward the Wall Street elite at the SEC.
Until that culture is transformed, the SEC will not be the tough cop-on-the-beat that the public needs, Grassley said.
The summary of the report was posted on the SEC's website, http://www.sec.gov/spotlight/secpostmadoffreforms/oig-509-exec-summary.pdf
(Reporting by Ross Kerber and Rachelle Younglai; Editing by Toni Reinhold)
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