September 30, 2009
SEC inspector recommends changes
U.S. Securities and Exchange Commission investigator H. David Kotz has recommended 58 steps to tighten enforcement in the wake of the Bernard Madoff scandal.
For thousands of investors, Ponzi scheme operator Bernard Madoff represents a $65 billion crime, not a scandal. At the SEC, however, Madoff, now serving a 150-year prison sentence, represents both after Kotz's internal investigation revealed six substantial warnings given SEC officials that resulted in missed opportunities to stop the Ponzi operator.
The strength of our capital markets relies on investor confidence, which in turn depends on vigorous regulatory oversight, Kotz's office wrote.
The SEC agreed with all 58 recommendations, including creating guidelines for how SEC officials should react to newspapers and other periodicals that may publish tips on suspicious firms, USA Today reported.
In Madoff's case, the scheme could have been stopped sooner had SEC officials acted on published accounts that questioned Madoff's operations.