Investors warned SEC about Madoff

Investors warned the U.S. Securities and Exchange Commission for years that arrested trader Bernard Madoff’s numbers didn’t make sense, released records show.

Madoff was arrested in December for allegedly running a Ponzi scheme that cost investors as much as $50 billion.

But from 2003 to 2006, several investors had warned the SEC the once highly praised trader may have been running a scam, USA Today reported Tuesday.

I am deeply concerned that Madoff is running a very sophisticated fraudulent pyramid scheme, said an e-mail message to the SEC dated October 2005.

Returns of 12 percent to 18 percent annually for the last 20 years or so tells me something is wrong there, the e-mail said.

A letter sent in November 2006 warned the SEC that no down months and low volatility all the time just doesn’t add up.

SEC Associate General Counsel Richard Humes told the newspaper the early warnings would not unduly harm the ongoing investigation of Madoff, who is confined to his Manhattan apartment on $10 million bail.

Except for Humes’s comment, the SEC declined to comment on the warning letters, 12 of which were released to the newspaper, USA Today reported.