before Congress this week. This may be on CSPAN.
By CLEMENTE LISI
February 4, 2009
The whistleblower who waged a decade-long campaign to alert federal regulators to problems plaguing embattled money manager Bernard Madoff said today that the SEC “roars like a lion and bites like a flea” when it comes to combating wrongdoing.
Harry Markopolos blasted the Securities and Exchange Commission in his first appearance before Congress, saying the agency failed to act despite receiving credible allegations of fraud about Madoff’s operations for nearly a decade.
“There was an abject failure by the regulatory agencies we entrust as our watchdog,” he said.
Madoff, a prominent money manager, was arrested in December after confessing to his sons that he had lost a whopping $50 billion of investors’ money in a Ponzi scheme, according to federal authorities.
Markopolos, a securities industry executive and fraud investigator, brought his allegations to the SEC about Madoff starting in 2000.
“The SEC is … captive to the industry it regulates and is afraid” to bring big cases against prominent individuals, he said.
Despite detailed evidence he submitted to the SEC between 2000 and 2008, Markopolos said, the regulators did nothing. Because of their inaction, he said, “I became fearful for the safety of my family.”
Madoff, who was once chairman of Nasdaq and sat on SEC advisory committees, was “one of the most powerful men on Wall Street and in a position to easily end our careers or worse,” Markopolos said.
In December, Christopher Cox, then-SEC chairman, pinned the blame on the agency’s career staff for the failure over a decade to detect what Madoff was doing.
He ordered the SEC’s inspector general, H. David Kotz, to determine what went wrong. Kotz has expanded his inquiry to examine the operations of the divisions led by Thomsen, who has been the enforcement chief since mid-2005, and Richards, who has held that position since 1995.