SEC Criticized Over Madoff Probe
WASHINGTON (TheStreet) -- In a scathing report issued Wednesday, the inspector general of the SEC criticized the agency for not busting Bernie Madoff much, much sooner.
Still, the SEC's chief watchdog, David Kotz, unearthed no evidence that senior agency officials directly tried to influence the years-long investigation of history's biggest Ponzi artist in his favor. Scuttlebutt leading up the release of the report hinted at improper ties between Madoff and top-siders at the SEC.
The executive summary of the 450-page report did say, however, that the agency group tasked with investigating the now-imprisoned swindler, "almost immediately caught Madoff in lies and misrepresentations, but failed to follow up on inconsistencies," and ignored whistleblowers who came to the SEC with evidence.
"When Madoff provided evasive or contradictory answers to important questions in testimony," Kotz's summary continued, "they simply accepted as plausible his explanations."
The full report is slated for release on Friday.
In a separate statement, SEC Chairman Mary Schapiro said, "It is a failure that we continue to regret, and one that has led us to reform in many ways how we regulate markets and protect investors."
Schapiro, appointed by President Barak Obama, has commenced an SEC house-cleaning since her arrival. Several high officials, criticized heavily in the Kotz report, have left the agency.
The Senate Banking Committee has scheduled hearings to go over Kotz's report, starting Sept. 10.
-- Written by Scott Eden in New York
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